Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

DEATH OF A MEMBER

Madam Speaker: I regret to have to inform the House of the death of Robert James Adley, Esquire, Member for Christchurch. I desire, on behalf of the House, to express our sense of the loss that we have sustained. We send our sympathy to the relatives of the hon. Member.

PRIVATE BUSINESS

GREATER MANCHESTER (LIGHT RAPID TRANSIT SYSTEM) BILL [Lords] (By Order)

Order for Second Reading read.

Read a Second time, and committed.

BRITISH WATERWAYS BILL [Lords] (By Order)

Order for Second Reading read to be read a Second time on Monday 17 May at Seven o'clock.

CROSSRAIL BILL (By Order)

EAST COAST MAIN LINE (SAFETY) BILL (By Order)

WOODGRANGE PARK CEMETERY BILL [Lords] (By Order)

Orders for Second Reading read.

To be read a Second time on Thursday 20 May.

BRITISH RAILWAYS (No. 4) BILL (By Order)

Order read for resuming adjourned debate on Question [8 February], That the Bill be now read a Second time. Debate to be resumed on Thursday 20 May.

CROYDON TRAMLINK BILL [Lords] (By Order)

LONDON LOCAL AUTHORITIES BILL [Lords) (By Order)

Orders for Second Reading read.

To be read a Second time on Thursday 20 May.

Oral Answers to Questions — HOME DEPARTMENT

Child Abuse

Mr. French: To ask the Secretary of State for the Home Department when he expects to receive the results of the independent research he has commissioned on the use of video-recorded evidence in child abuse cases; and if he will make a statement.

The Minister of State, Home Office (Mr. Michael Jack): We expect to receive the results in January 1995.

Mr. French: Is my hon. Friend aware that, up to last month, there were only seven examples of the use of video evidence in child abuse cases? Does he agree that this form of evidence giving not only enhances the prospect of a safe conviction, but involves minimum extra trauma for the children concerned? Will he seek to promote it, and also consider its relevance to other offences—for example, rape?

Mr. Jack: I thank my hon. Friend for raising the issue. I know that he has campaigned assiduously in his constituency. Let me update him: pre-recorded pre-trial interviews with children have now been presented as evidence in 22 cases, and to date none has been refused. I assure my hon. Friend that we are considering the development of this important way of giving evidence. A new pack has been issued to help and educate children in the act of giving witness evidence; once we know more about this method—which is the aim of the report—we shall consider extending it in due course.

Mr. Allen: Will the Minister pass my congratulations to his interdepartmental team, and in particular to the Department of Health? They have done some very good work.
Will the Minister go a step further? Does he accept that there is a great deal of concern about the disparate quality of research? Will he try to pull the research together in a national centre, and perhaps set up regional centres for both abusers and, more important, the abused? If he were prepared to do that—or, at least, to undertake to review the policy—he would bring great relief to the hundreds of thousands of victims of child and, indeed, sexual abuse, whose lives are being blighted.

Mr. Jack: I thank the hon. Gentleman for his responsible attitude to this development, which is a product of the Criminal Justice Act 1991. I know from my visits to, for example, the Kent police's vulnerable victims suite that many police forces are now developing a particularly sympathetic and careful way of dealing with such evidence, and I am sure that they will discover more cases of child abuse as a result. Much of what has been done now needs to be evaluated; during that excercise, I shall bear in mind what the hon. Gentleman has said.

Mr. Riddick: The use of video-recorded evidence is, of course, very helpful, but would it not also be beneficial to abolish the right to silence in child abuse cases? That would also be useful in terrorism cases. Is it not time that juries were allowed to draw an inference from a suspect's


refusal to say where he was or what he was doing at a certain time? The innocent will have nothing to hide. Is not the right to silence the criminal's best friend?

Mr. Jack: I know from earlier exchanges how many right hon. and hon. Members are troubled about that. My right hon. and learned Friend the Home Secretary has received a copy of the report by the National Society for the Prevention of Cruelty to Children, which deals with some of the issues. Although the report reached no firm conclusions, we have read it carefully and will consider its findings, together with the Royal Commission on criminal justice, whose report will doubtless include comment on the important point that my hon. Friend has raised.

Women-only Bus Services

Mr. Cryer: To ask the Secretary of State for the Home Department if he will make a statement on his policy towards the provision of women-only bus services operated in the evening.

Mr. Jack: My right hon. and learned Friend is always anxious to encourage initiatives such as this which seek to address the problems of crime and the fear of crime.

Mr. Cryer: If the Home Secretary is so anxious about providing evening-only services for women such as the Homerunner bus service in Bradford, which has had to be withdrawn, why does he not provide a grant, which has been provided for about three years? The sum of £18,000 will get that bus back on the road and provide 300 or so women each week who use the bus service with a safe service once again. That would be about the cost of the Home Secretary's chauffeur-driven car—looking at the right hon. and learned Gentleman's figure, I think that he could do with the exercise. He should cancel the car and donate the money to keep the women of Bradford safe.

Mr. Jack: As I am sure we shall see later, my right hon. and learned Friend is a man who is light on his feet. In fairness, the safer cities project in Bradford has been generous with its support. We originally gave a grant of £24,500 to the project in January 1990, on the proviso that funding would be raised locally. As it was not, a second grant was given in 1991 to do the same thing. To help still further, a third grant of £18,000 was given in 1992. We have bent over backwards to sustain the service, which is caught up in the general debate in Bradford about safer cities. On 12 March 1993 the Telegraph and Argus stated that we should not allow the momentum generated by the Bradford safer cities projects to be lost. I hope that the hon. Gentleman will support that view.

Police Duties

Mr. David Shaw: To ask the Secretary of State for the Home Department what steps are being taken to monitor the amount of policemen's time spent on beat duty, administrative and other matters.

The Secretary of State for the Home Department (Mr. Kenneth Clarke): The Government have encouraged and assisted police forces to introduce standard activity sampling as a way of monitoring the time that police officers spend on beat duty, administrative and other

matters. In addition, as I announced last week, we are launching an urgent study into ways of reducing the paperwork burden on the police.

Mr. Shaw: I thank my right hon. and learned Friend for his reply, and I recognise that the Government are trying to make strides in that area. My constituents in Dover and Deal, and the many country villages, want see policemen on the streets—they want them to be a visible presence. They want to see the bobby back on the beat. Will my right hon. and learned Friend make every effort possible to ensure that bobbies are not tied down by administrative work in the police station?

Mr. Clarke: I am sure that my hon. Friend is right in his analysis of what his constituents would like to see. I am pleased to be able to remind him that Kent police have the highest proportion of their policemen on beat and patrol duty of any provincial force bar Surrey—they already have a good record.
The reason that I decided to institute a study of the paperwork burden on the police service was to ensure that we could reduce to the necessary minimum the amount of time spent behind desks carrying out paper-related duties when arrests and prosecutions take place. We want to ensure that the biggest proportion of police time is spent on beat and patrol duty, with the police visible to the public of Kent and elsewhere.

Mr. Miller: I am sure that the Home Secretary will share the concerns expressed on both sides of the House about the increasing levels of serious crime, especially in areas such as my own in Cheshire. Against that background, will the Home Secretary state why the head of the regional crime squad in Cheshire, Detective Superintendent Holt, together with Detective Sergeant Goulding and Detective Constable Lamble are currently confined to desk duties? Will the Home Secretary ensure that every effort is made to bring the matter to a speedy conclusion as it not only affects public confidence in the force, but relates to matters that appear to imply a serious miscarriage of justice?

Mr. Clarke: Obviously, the individual disposition of officers is a matter for the chief constable, not me, but I shall make inquiries into the present status of the case in Cheshire referred to by the hon. Gentleman and write to him if I can give him any up-to-date information. It is sometimes necessary to suspend officers or confine them to desk duties when allegations are made against them. I am extremely concerned that, when they occur, investigations should be carried out as rapidly as possible and fairly. I am always anxious to ensure that such complaints and disciplinary measures are brought to a conclusion as quickly as possible.
I have already put out a consultative document about disciplinary procedures in the police force. Although parts of it are controversial, most people agree that it is wrong from the point of view both of the public and of the police officers concerned that the process should become too protracted and legalistic and come to no conclusion for too long.

Mrs. Angela Knight: My right hon. and learned Friend will be aware of the difficulties that the Derbyshire police force has to bear as a consequence of adverse decisions taken by the county council. Does he agree that his proposals to allow greater freedom for both police


authorities and chief constables will result in more bobbies on the beat, which is what my constituents in Erewash want?

Mr. Clarke: We have proposed stronger police authorities than there have been hitherto. I think that Derbyshire shows the need for a stronger police authority than its county council has been able to provide. We have also proposed that those stronger police authorities and chief constables should have far more discretion in how they deploy their resources. I am sure that, when these and the other reforms come into effect, the chief constable of Derbyshire, his force and the police authority will respond to the wish of the people of Derbyshire for a visible police presence on patrol, providing a sense of security and effective protection against crime for the people of Erewash and elsewhere.

Mr. Blair: Is not one part of ensuring that there are more police men and women on the beat, which is what everyone wants, the need to build in proper incentives and esteem for the police constables who will be carrying out this duty? Will the Home Secretary therefore undertake, as part of the inquiry being conducted by Sir Patrick Sheehy, to ensure that such incentives are built into the terms and conditions of employment of police, so that more of them are encouraged to go on the beat?

Mr. Clarke: I have had only informal contacts with Sir Patrick and his colleagues throughout the inquiry, because it is an independent inquiry, but I have given him my views on a number of subjects—views identical to those just expressed by the hon. Gentleman. I am sure that Sir Patrick and his team will bear them in mind when coming to their conclusions. It is important that rewards be distributed fairly to reflect the responsibilities borne by officers, and that the responsibilities of beat and patrol officers, whom the public rate most highly of all, be properly taken into account in the rewards system.

Parental Responsibility

Mr. Jacques Arnold: To ask the Secretary of State for the Home Department what measures his Department has taken to make parents more accountable for the behaviour of their children.

Mr. Kenneth Clarke: From 1 October last year, courts have new powers to bind over the parents of offenders under the age of 16, order parents to attend court with their children and to pay their children's fines.

Mr. Arnold: Is it not wrong that a tiny minority of parents allow their children to run riot, to the detriment of their neighbours and of other victims? Is not punishing the parents for the crimes of their children a deterrent and a way of making them face up to their responsibilities? Does my right hon. and learned Friend agree that describing these measures as "punishing the innocent" as the Opposition did when voting against them, is wholly wrong?

Mr. Clarke: I agree with my hon. Friend. Of course, many parents are decent people who do their best with their children but, for one reason or another, they cannot retain control of a child that becomes delinquent. The courts will not impose penalties on such parents. There are also parents, however, who neglect the behaviour of their

children and just assume that it is up to the police and the courts to protect the public from them. I therefore think that one of the best features of the Criminal Justice Act 1991, about which I shall be making a statement in a few moments, was the fact that it gave these powers to the courts. It is indeed ridiculous that this was about the only part of the Act that the Opposition chose to oppose.

Mr. Maclennan: Would the Home Secretary take time to familiarise himself with the Scottish system for dealing with offenders which, through the children's panels, involves parents closely from the beginning of a case and appears to have rather greater success than the English juvenile courts system in preventing recidivism?

Mr. Clarke: I was in Scotland yesterday afternoon and evening, and overnight until this morning. I took the opportunity of doing a little public sounding of my own among the Scotsmen and women whom I met. I apologise for the fact that my sample was not fully politically representative; but the Scottish children's panels have met a rather more mixed reaction than I would have expected. Not everyone agreed that the situation in Scotland is nearer perfection than it is here.

Obscene Publications Act 1959

Dr. Spink: To ask the Secretary of State for the Home Department when he expects to complete his current review of the operation of the Obscene Publications Act 1959.

Mr. Jack: My right hon. and learned Friend hopes to be in a position to announce the conclusions of that exercise shortly. It will lay particular emphasis on ways in which the enforcement of the Obscene Publications Act 1959 can be made more effective.

Dr. Spink: I thank my hon. Friend for that answer, and I am pleased that he is considering ways to prevent that degrading material from escaping the law. How will his review impact on "Juliet", a book which our right hon. Friend the Prime Minister described recently as "truly horrifying" and which the Attorney-General refused to prosecute because of the deficiencies in the 1959 Act?

Mr. Jack: My hon. Friend has taken a leading part in drawing the attention of the House to such matters and will know that they are for the Crown Prosecution Service. I remind him that, in 1991, there were 218 successful prosecutions under section 2 of the Obscene Publications Act. As far as the weight of our review is concerned, we want to hit the pockets of pornographers hard, and to make the operation of the Act more effective. As my right hon. Friend the Prime Minister has said, however, a full-scale review of all the problems of the 1959 Act, which my hon. Friend knows well, is not necessarily the best way to achieve what he wants.

Mr. Alton: Does the Minister accept that obscenity, in its widest sense, also includes violence? As he knows, the dissemination of violence is widespread, especially through television programmes—many of which are broadcast before the watershed—and soaps, which broadcast incest, murder and all sorts of violence as though they were part of everyday living. That sort of obscenity also needs to be examined in the context of his review. Now that more than 100 Members from many parts of the House have signed


an early-day motion calling for an inquiry into the link between television violence and violence in society, does he not think that that sort of review is urgently needed?

Mr. Jack: I am sure that the hon. Gentleman will have noted from public statements made by the Prime Minister and the Home Secretary that we take what he said very seriously, and I associate myself with those comments. Yesterday, I was in discussion with the Video Standards Council, which said much the same as the hon. Member. One of the little known facts about the 1959 Act is that the term "corrupt and deprave" can apply equally to violence and to pornographic material.

Mrs. Ann Winterton: While I note that my hon. Friend and his Department have resisted calls for a fundamental review of the 1959 Act and are merely considering its enforcement, will he take it from me that that will not bring about the success—a change in the law—that he has said he wants? Does he accept that he will have to review the test of obscenity in the 1959 Act, that unless he does so no other legislation will be as strong as he would wish, and that it is about time that the Government undertook a fundamental review and brought before the House changes to improve and strengthen the outdated and flawed Obscene Publications Act?

Mr. Jack: My hon. Friend is right to use the word "outdated" in her question. Because of the exhibition that she helped to stage in the House, she knows that pornography is being disseminated by new high-tech means and by information technology, and those are the areas that we must hit hard; improving the effectiveness of the operation of the 1959 Act is one of the best ways to deal with that. She will also know that the Government have a long-standing commitment that, if someone introduced workable alternative through private Members' legislation—the 1959 Act was such a piece of private Members' legislation—we would consider it very carefully.

Police Reorganisation

Mr. Morgan: To ask the Secretary of State for the Home Department what consultations he has had in relation to the reorganisation of police forces in Wales.

The Parliamentary Under-Secretary of State for the Home Department (Mr. Charles Wardle): None, because my right hon. and learned Friend has no plans to reorganise police forces in Wales.

Mr. Morgan: Following last week's election results, which removed from Tory control all but one of the shire counties in England—almost as good as Wales, where we have been a Tory-shire-county-free zone since 1981—can the Home Secretary assure the House that he will not seek to take petty revenge on the electorate by removing all forms of democratic accountability from police forces when the boundaries are reorganised? How does he propose to align the boundaries of police authorities with the new boundaries of the unitary authorities as and when we get them in Wales—or is he going to tell the House that the only form of democratic accountability that he sees in the future for police forces in Wales and in England is his own, larger-than-life personality?

Mr. Wardle: My right hon. and learned Friend the Home Secretary set out his proposals for the membership of police authorities in the statement that he made to the House on 23 March. The hon. Gentleman will know that my right hon. Friend the Secretary of State for Wales has proposed a single tier of unitary authorities, which fall within the existing police areas, except in one instance where it crosses the boundaries of Gwent and South Wales. We shall have to consider in due course whether to adjust police areas to match new local government boundaries.

Mr. Jonathan Evans: Is my hon. Friend aware that the greater flexibility and freedom proposed by my right hon. and learned Friend the Home Secretary has been warmly welcomed by the chief constable of Dyfed-Powys? In considering what the force areas should be, will he give attention to the importance of smaller forces, particularly the Dyfed-Powys force which, according to figures recently published by the Home Office, has the best clear-up rate in the country?

Mr. Wardle: Yes, my hon. Friend is right. The Dyfed-Powys force stands at the top of the league of clear-up rates for the whole of England and Wales. He may have seen—as I have been made aware of it—the chief constable's paper on the size of police forces. In his statement on 23 March, my right hon. and learned Friend the Home Secretary proposed to simplify the statutory procedures by which forces can be amalgamated. He made it clear that he has no fixed, preconceived ideas about either the right number or the right size of police forces.

Mr. Michael: Perhaps the Minister can explain why the Home Secretary wants an accelerated process to deal with police mergers. We do not believe that his intentions are so innocent. Will the Minister accept that, after a 121 per cent. increase in crime under the Conservatives in Wales and in England, the last thing that the police or the public want is the diversion of a major reorganisation? They certainly do not want police authorities chaired by right-wing commissars parachuted in by ministerial decree. Will the Minister give priority to supporting the police, local authorities and communities in their efforts to reduce crime and to fight crime, and note that the smallest forces—not just Dyfed-Powys but Gwent—have the best clear-up rates?

Mr. Wardle: The hon. Gentleman will have noticed that the increase in crime in 1992 in Wales was marginally less than the average for England and Wales as a whole. He spoke about the procedures that alllow amalgamations. I hope that he has done his homework and looked at the legislation introduced in the 1960s, which makes the approach to any such amalgamation proposals very complex. That is why my right hon. and learned Friend proposes to simplify those procedures, and he will deal with possible amalgamations as and when they should arise. The hon. Gentleman forgets that the proposals for the reform of the police service are aimed at strengthening the ability of police forces to protect the public, to prevent crime where they can do so and to tackle crime when it occurs.

New Age Travellers

Mr. Clifton-Brown: To ask the Secretary of State for the Home Department what steps his Department have taken to tackle the problem of new age travellers.

Mr. Charles Wardle: We propose to strengthen section 39 of the Public Order Act 1986 to give the police stronger powers to prevent invasions by travellers and new powers to enable them to prevent illegal rave parties.

Mr. Clifton-Brown: My hon. Friend will be aware that my constituents in Gloucestershire will be glad to hear that news. I informed him as long ago as the last May bank holiday weekend that we had a rave party in Lechlade, which cost the taxpayer well over £100,000; we had another invasion by travellers last weekend, which cost taxpayers over £200,000. My constituents in Gloucestershire barricade their homes and their land to prevent such huge invasions. Is he aware that they are now looking to the Government to take action to amend section 39 of the Public Order Act?

Mr. Wardle: I share my hon. Friend's concern about the distress caused by large rowdy gatherings of travellers and ravers whose selfish behaviour intrudes on other people's private lives, but I hope that he acknowledges that there have been two key developments since last summer. First, as my right hon. and learned Friend has announced, we intend to strengthen the Public Order Act and apply it to a wider range of circumstances. We also propose to give the police new powers to protect local communities from illegal gatherings. Secondly, the Association of Chief Police Officers has established two co-ordination centres for intelligence gathering on travellers, and has made arrangements for much closer liaison and mutual aid to tackle just such problems. Those centres were put to good effect in the Cotswolds during the bank holiday weekend at the beginning of May.

Mr. Trimble: Does the Minister appreciate that problems with raves are not confined to those that take place in the open air, but also affect those that take place on certain premises? The existing licensing legislation and the penalties connected therewith are wholly inadequate and need to be greatly strengthened.

Mr. Wardle: I note what the hon. Gentleman says. He will be aware that another piece of legislation is involved there, but if he cares to make representations they will be listened to carefully in the Home Department.

Car Crime

Mr. Whittingdale: To ask the Secretary of State for the Home Department what innovation his Department is considering to tackle car crime.

Mr. Jack: My advisory committee on car crime is looking at devising new ways to encourage a greater take-up of car security systems. Those efforts will be supported by the continuation of our successful car crime prevention campaign.

Mr. Whittingdale: Is my hon. Friend aware that immobiliser devices such as those produced by the Immobiliser group in Chelmsford are proving extremely effective in preventing car crime and are also now

affordable? Does he agree that if more motorists spent a few extra pounds installing such devices that would have a major impact in reducing car crime?

Mr. Jack: My hon. Friend succinctly underlines one of the key messages that helped to make car crime prevention year a success. At the start of the year, car crime was rising at a rate of 18 per cent. but by the end of the year the rate of increase had dropped to 3 per cent. and the increase in thefts of cars—immobilisers are relevant to that statistic was only 1 per cent. We are now renewing our campaign and I am sure that that message will form a key part of it.

Mr. Faulds: Why can the car industry itself not make a greater contribution to the prevention of car crime?

Mr. Jack: If the hon. Gentleman had been with me at the fleet motor show recently he would have seen that most of the models now available in the United Kingdom come fitted with alarms, immobilisers and other security devices. Those are extremely effective and major buyers such as fleet users are seeing great success when they purchase cars with such equipment.

Mr. Sykes: Is my hon. Friend aware that recently on television a member of the North Yorkshire probation service referred to the prisoners in her charge as "clients"? Should we not stop listening to the so-called experts and start doling out punishments that fit the crime rather than the criminal?

Mr. Jack: I assume that behind my hon. Friend's question is the idea of the persistent young car thief. The Home Secretary's announcement that he will introduce a secure training order to deal with persistent young criminals, many of whom are car thieves, goes to the heart of my hon. Friend's question.

Crime and Unemployment

Mr. Skinner: To ask the Secretary of State for the Home Department if he will initiate new studies into the causes of crime and its relationship to unemployment.

The Minister of State, Home Office (Mr. Peter Lloyd): Work on that subject was covered in the Home Office research study, "Trends in crime and their interpretation", published in 1990 and I have no current plans for fresh research in that area.

Mr. Skinner: I regard that as shocking complacency on the part of the Government. Everyone knows that young men and women are without jobs; there are 500,000 of them on schemes and a further 500,000 waiting to leave school who cannot be motivated by their teachers because they know that their brothers and sisters have not had a job for four or five years. Is it any wonder that in our area people still repeat the old adage that the devil makes work for idle hands? It is time that the Government got back to full employment or made way for a party that will create employment.

Mr. Lloyd: The hon. Member for Bolsover (Mr. Skinner) gets carried away as he expresses his own prejudices rather than the truth. The study made it perfectly clear—I quote from the introduction by Dr. Simon Field—that the fluctuations in the total numbers of unemployed persons appear to be independent of the fluctuation in the number of offences. I will give the hon.
Gentleman an example that will appeal to his hon. Friends. When unemployment fell by 6 per cent. under the Conservatives in 1970–74, reported crime rose by 6 per cent. per year. When the Labour Government that followed the Conservative Government in 1974–79 saw unemployment rise by 17 per cent., reported crime increased by only 4 per cent. I expect the hon. Gentleman to tell me next that Labour unemployment is not merely better than Conservative unemployment, but is better than Conservative recovery as well.

Sir Anthony Grant: Will my hon. Friend reject once and for all the absurd myth that there is a direct link between unemployment and the rise in crime? Bearing in mind that before the war there was far greater poverty and unemployment, and far less crime, will he apply his mind much more to the real reasons, which are the breakdown in family life and, not least, the continual flouting of authority which is so much encouraged by Opposition Members?

Mr. Lloyd: My hon. Friend is right, although I am sure that individual unemployment can be a precipitating factor in individual cases, and that areas of multiple deprivation are huge impediments to normal law-abiding life. These are complicated problems, which we are seeking to tackle with inner city programmes, most particularly city challenge. When one considers the people who have been convicted and are in prison, what strikes one particularly is the large proportion who have been in care. Up to 40 per cent. of young offenders in prison have been in care, compared with 2 per cent. of the population as a whole, and 30 per cent. of them were consistently truanting in their last years at school. Most of them, however, have had a job, although I have no doubt at all that for the large minority who have not a large part of the reason is that they think that honest work is a mug's game.

Ms Ruddock: No one on this side of the House deems that unemployment is any excuse for crime, but the Minister's last reply gave more considered attention to this issue. Is he aware that in London, in the poorest areas and those with highest unemployment, such as Southwark, Lambeth and Hackney, there are indeed the highest crime rates, particularly for robberies and burglaries? How does he respond to deputy assistant commissioner Roach of the Metropolitan police, who said:
Crime trends are largely determined by social factors…over which the police have very little influence"?
I suggest that the Government have much control over many of those social factors and that it is time that they attended to them and really exerted some influence towards reducing the crime rate, particularly in the capital.

Mr. Lloyd: What is perfectly clear—I will send the hon. Lady the research if she has not seen it—is that, despite all our efforts over the years to find a connection between unemployment and crime, we have not done so. Nevertheless, as I have said, I have no doubt that unemployment and many other factors play a part in individual tendencies to crime. It is too easy for Opposition Members to blame unemployment. It is a complex vicious circle and, as I said in reply to my hon. Friends, the whole range of factors, particularly in the deprived areas of inner cities, needs to be tackled as a whole. That is exactly what the Government's inner city programmes seek to do. There is no single answer. Unemployment is certainly not a prime cause or a direct

cause of crime. To say that it is such a cause is an insult to those who are unemployed and who would never indulge in crime.

Sentencing

Mr. Spring: To ask the Secretary of State for the Home Department what representations he has received regarding the right to appeal against lenient sentences.

Mr. Kenneth Clarke: Most of the representations I receive on the right of appeal against lenient sentences, which was introduced by the Criminal Justice Act 1988, are to indicate views on the outcome of particular cases.

Mr. Spring: Does my right hon. and learned Friend recall that although the hon. Member for Sedgefield (Mr. Blair) ludicrously tries to talk up his party as the party of law and order, the hon. Gentleman and his party voted against the measure? How can the British people take seriously Labour's pretension to support law and order when—

Madam Speaker: Order. The hon. Gentleman is calling into question the Opposition's policies. He must ask the Government about their policies, especially in relation to his substantive question.

Mr. Spring: Will my right hon. and learned Friend confirm the importance of ensuring that lenient sentences are referred and that we get the proper passing of sentences appropriate to the crime?

Mr. Clarke: I entirely endorse my hon. Friend's sentiments. He is right to recall that it was this Government who introduced the new power and enabled an appeal to be made against unnecessarily lenient sentences. It was used recently most notably when there was widespread public feeling about the sentence first imposed on a 15-year-old for an offence of rape in south Wales. My right hon. and learned Friend the Attorney-General used his powers under the Criminal Justice Act 1988 to go to the court and to get a proper sentence imposed. That power was introduced by this Government only a few years ago. My hon. Friend is right to recall that it was opposed by Opposition Members, including Opposition Front-Bench Members.

Mr. Mike O'Brien: Is the Home Secretary aware that one of the main reasons why the courts have been concerned about lenient sentences is section 29 of the Criminal Justice Act 1991, which the Government brought into force last October? When the Home Secretary gave evidence to the Select Committee on Home Affairs, he said that he did not intend to review the provision until a year had passed. Is not it the case that if he now intends to review section 29 and if he now accepts that there is inadequacy in the legislation that his Government passed to deal with crime, it is only because strong pressure to be tough on crime has come from the Opposition? Again, he has shown complacency.

Mr. Clarke: My hon. Friend the Member for Bury St. Edmunds (Mr. Spring) has just pointed out that the Labour party ferociously opposed the prosecution's right to appeal against sentences. My hon. Friend the Member for Gravesham (Mr. Arnold) pointed out that Labour opposed the power of the court in the 1991 Act to take parents before the courts and to make them liable for the


fines of their children. Section 29 of the 1991 Act was one of the measures to which the Opposition raised no opposition and which they supported. It is not working as Parliament intended. I have been saying for months that I intend to put the matter right as soon as I can. If the hon. Gentleman stays in the Chamber for about 20 minutes, he may get news which puts his mind at rest on the question.

Mr. Sweeney: Does my right hon. and learned Friend agree that it is Labour which has opposed every major piece of criminal justice legislation in the past 14 years?

Madam Speaker: Order. Some hon. Members will never learn. If the hon. Gentleman can ask a supplementary question that is in order, I shall of course want to hear him. I have selected him to speak.

Mr. Sweeney: Does my right hon. and learned Friend agree that it is a bit rich for Labour—

Madam Speaker: Order, I shall pass on. I selected the hon. Gentleman because he has a substantive question on the Order Paper and I thought that he might like to follow it up. I hope that he will understand if I now call Mr. Spellar.

Prisons (Private Security Firms)

Mr. Spellar: To ask the Secretary of State for the Home Department if he will make a statement on the operation of prisons and the transport of prisoners by private security firms.

Mr. Peter Lloyd: Private sector involvement in the Prison Service is designed to improve standards across the whole prison system.

Mr. Spellar: Has the Minister any comment on the death of Mr. Hogg in custody? Has he any comments on the use of untrained drivers by Group 4? What qualifications has Group 4 for the job, apart from its association with the chairman of the Conservative party? Can the Minister further confirm whether the Metropolitan police have been instructed not to tender for certain categories of jobs such as the transfer of prisoners in London? When will he drop the prejudice, sack Group 4 and let the job be undertaken by the professionals?

Mr. Lloyd: I will not say anything about Mr. Hogg other than that I regret very much—as does Group 4—his death, which is being investigated by the police and by the Prison Service. The hon. Gentleman has referred to Group 4. Its escorts have been conveying a thousand prisoners a week for the past six weeks, after a very unfortunate start —I accept that—for everyone but the cartoonists and the knee-jerk reactionaries on the Opposition Benches, when Group 4 lost eight prisoners in the first three weeks, of whom three at least did not escape due to its error. Group 4 has been doing its difficult and demanding job with increasing efficiency. Last year in that area the police and the Prison Service lost at least 30 prisoners, so Group 4 has a long way to go in losing prisoners before it catches up with the public sector. [Interruption.]

Madam Speaker: Order.

Mr. Lloyd: Opposition Members should restrain their laughter and note that Group 4 is releasing up to 150 highly trained police officers for operational duties in the public interest. Group 4 ought to continue and make a

success of its work; only the anti-private sector vendetta of Opposition Members would be served by the cancellation of its contract.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Congdon: To ask the Prime Minister if he will list his official engagements for Thursday 13 May.

The Prime Minister (Mr. John Major): This morning, I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Congdon: Does my right hon. Friend agree that the levels of compensation paid out under the citizens charter demonstrate its effectiveness? Does he further agree that the moves to agency status and contracting out are the best way of achieving value for money? Does he also agree that it is not surprising that all those measures have been resisted by the Labour party?

The Prime Minister: As to the last part of my hon. Friend's question, I am unsurprised.
Paying compensation is popular with those who use public services. I also believe that it is right that compensation should be paid when service is bad. It provides a satisfactory discipline on the public services. As regards contracting out, I certainly agree with my hon. Friend. It has brought great benefits both to those who use public services and, critically, to those who pay for public services.

Mr. John Smith: Since the opposition of the whole teaching profession to the imposition of tests this year has been reinforced by the overwhelming vote by members of the National Union of Teachers in favour of a boycott, will the Prime Minister now do the sensible thing and suspend compulsory tests this year?

The Prime Minister: I was very sad this morning to see the result of the vote by the National Union of Teachers, which was the only teacher association not to welcome the statement of my right hon. Friend the Secretary of State for Education on Tuesday. A lot of people will be asking whether that union, really supports the principle of regular testing in our schools or whether another agenda concerns it. I very much trust that the NUT will reflect on what my right hon. Friend said.

Mr. Smith: As the Secretary of State for Education was forced to concede that there were flaws in the tests, which is why he climbed down about next year, why on earth is the Prime Minister forcing children to take the tests this year?

The Prime Minister: What should be called off are the unprofessional and utterly futile boycott threats. Teachers should do what the majority of parents want—co-operate in helping to make the tests work this year and in future years.
On the second point of the right hon. and learned Gentleman's question, he will recall that he has asked me that before. Ron Dearing has made it absolutely clear that he needs the experience of this year's tests to redesign them satisfactorily for the future.

Mr. Smith: As there is overwhelming opposition to compulsory tests this year, from parents as well as teachers and governors, why does the Prime Minister not show a glimmer of common sense and end the farce now? If he is not listening to parents and teachers, whom is he listening to? Does he not understand that to be so foolishly stubborn is a sign of weakness and not of strength?

The Prime Minister: It is common sense to proceed with tests so that we can correct them and get them right in the future. Testing in schools is vital to measure the progress of the pupils concerned. The Opposition may wriggle, but that happens to be the reality. I hope that even, at this late stage, teachers will realise the importance to pupils of having these tests, the importance to the reform of testing of having those tests and the importance to the dignity of the profession of teaching in not proceeding with industrial action at the expense of schools.

Mr. Gorst: Is my right hon. Friend aware that since the Conservative Government came to office in 1979 membership of trade unions has fallen by 28 per cent? Will my right hon. Friend say whether he believes this is due to their being a growing anachronism, badly led, or merely because of their limpet-like, hand-in-glove connection with the Labour party?

The Prime Minister: I am certainly not inclined to disagree with any of my hon. Friend's points. Trade union membership does continue to decline and is substantially lower than it was a decade or so ago. I notice that many of the unions still sponsor right hon. and hon. Members on the Labour Front Bench and resist suggestions that they should abandon the out-dated block vote in favour of one member, one vote. It is a case of he who pays the piper calls the tune, and on this, too, the right hon. and learned Member for Monklands, East (Mr. Smith) is wriggling.

Mr. Burden: To ask the Prime Minister if he will list his official engagements for Thursday 13 May.

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Burden: The Prime Minister will probably have heard that his right hon. Friend the Chancellor has said that he regrets
that inflation got out of control at the end of the 1980s.
Would the Prime Minister care to enlighten the House as to what jobs he was doing at the end of the 1980s?

The Prime Minister: If the hon. Gentleman had cared to research very carefully, he would have known that we have made it clear on a number of occasions that after the 1987 stock exchange crash we reduced interest rates faster than, with hindsight, we thought was correct, and that contributed to inflation. The hon. Gentleman will also know that, at that time, the right hon. and learned Member for Monklands, East and the right hon. Member for Berwick-upon-Tweed (Mr. Beith) both invited us to cut interest rates further and faster and that that would have put inflation up even more. The hon. Gentleman should do his research more accurately.

Mr. Jessel: To ask the Prime Minister if he will list his official engagements for Thursday 13 May.

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Mr. Jessel: As the economy and business confidence have, under the Conservative Government, begun to improve—especially since Britain left the exchange rate mechanism—will my right hon. Friend give further support to business confidence by making it clear that the United Kingdom will not return to fixed exchange rates?

The Prime Minister: As my right hon. Friend the Chancellor has said, and as I made clear earlier this year, we will not consider rejoining the ERM before important conditions have been met, in particular the requirement that German and United Kingdom monetary policies must be much more closely aligned before we can begin to consider whether it would be appropriate for Britain to rejoin. Clearly those conditions are unlikely to be satisfied soon.

Mr. Barnes: To ask the Prime Minister if he will list his official engagements for Thursday 13 May.

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Barnes: Some people still believe in the ultimate objective of a multi-ethnic democratic society, with full minority rights, for the former Yugoslavia. Included among them are many of the people of Yugoslavia who bravely stand out against violence and intimidation. Why do we not listen to some of their ideas for the extension of safe havens and United Nations border controls? Is the right hon. Gentleman aware that not everyone in Yugoslavia is a supporter of paramilitarism and war lords?

The Prime Minister: We have indicated on a number of occasions in the House the way in which we think it is right for us to proceed at the moment. We have made that clear and we have said that we believe that it is right to continue to pursue a political settlement, without which no settlement can stick in the long term even though perhaps for a short while it might be held. We have made it clear that we believe that it is right to proceed with sanctions, and we have not ruled out the use of force, should that prove necessary, in selected circumstances.

Mr. Alan Howarth: To ask the Prime Minister if he will list his official engagements for Thursday 13 May.

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Mr. Howarth: Does my right hon. Friend agree that as economic growth strengthens and as our improved competitiveness, particularly in manufacturing, makes its impact, that will increasingly be appreciated by the voters, who will also note the nature of the Opposition parties —one inextricably tied to the big unions and big bureaucracy and the other without roots and no more than the scavengers of British politics?

The Prime Minister: Things have certainly been difficult for many companies and people throughout the recession. I understand that and have acknowledged it on a number of occasions. I believe that as recovery comes through, many of those people will see that it would not have come through unless we had taken the right decisions to get inflation down and keep it down for the future.
We can now see that manufacturing output is turning up, that manufacturing productivity is at record levels, that exports of manufactures are at record levels and that, according to the Confederation of British Industry,


optimism in manufacturing industry has reached a 10-year high. They are very welcome signs. We are clearly coming out of recession in the right circumstances for sustained growth over a long period.

Mr. Nicholas Brown: When the right hon. Gentleman took the decision to withhold the helicopter carrier order from Swan Hunter Shipbuilders, he will have known that he was bringing shipbuilding on Tyneside to an end, so he will not be surprised to learn that at 1 o'clock today Swan Hunter called in the receivers and 6,000 people are now to lose their jobs on Tyneside. Will the Prime Minister help my constituents by telling them where they will find alternative work?

The Prime Minister: I think the hon. Gentleman knows that, of the two tenders submitted, that submitted by VSEL at Barrow was many tens of millions of pounds below the tender submitted by Swan Hunter. I understand the difficulties faced by Swan Hunter and, because I know of those difficulties, I agreed with my right hon. and learned Friend the Secretary of State for Defence to bring forward that tender earlier than we would otherwise have done to see whether Swan Hunter could satisfactorily win the tender in open competition. I regret that it did not, but I am not in a position to reject a tender many tens of millions of pounds below that of the alternative tender.
The answer to the substantive second part of the hon. Gentleman's supplementary question is that it is precisely because we are concerned about the employment prospects on Tyneside that we yesterday announced a range of measures to help, including a new enterprise zone, a new English Estates development in conjunction with the city council and the development corporation, more services from the Tyneside training and enterprise council and employment services, confirmation that Newcastle and South Tyneside will remain a development area, and extra resources for the Tyne and Wear development corporation for industrial sites.
I invite Opposition Members who scoffed when I mentioned the enterprise zone to look at other parts of the country that have faced similar difficulties in the past to see how effective that has been. They might, for example, recall the great difficulties at Shotton 10 years ago. If they go back to Shotton today, they will find a modern estate with high-paid, permanent, high-tech, secure jobs for just as many people as once worked in the steel industry there.

Mr. Ancram: To ask the Prime Minister if he will list his official engagements for Thursday 13 May.

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Mr. Ancram: Does my right hon. Friend agree that as well as the optimism to which he referred in yesterday's CBI survey, there are also real indications of growth and increased investment in most of the regions of the United Kingdom, including the south-west? Given that after three hard years of recession most people in my constituency, and elsewhere, want to see real, tangible proof of recovery, as well as promises of recovery, does my right hon. Friend welcome the report as a true indication of recovery which even Opposition Members cannot deny?

The Prime Minister: Yes, I do welcome the report and I hope that that encouraging trend will continue in the months ahead. It is encouraging that businesses right across the country themselves expect to grow strongly in the months immediately ahead of us—in the south-west, certainly, but also in the south-east, the midlands and right across the land. What we in the House all want, I think, without exception, is to see that growth translated into jobs and into money in the family pay packet.

Mr. Malcolm Bruce: To ask the Prime Minister if he will list his official engagements for Thursday 13 May.

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Bruce: Does the Prime Minister accept that the campaign by his right hon. Friend the Secretary of State for Social Security to transfer payments from post offices to banks is totally inimical to the interests of those who live in rural communities? Will he ask the Secretary of State to call off that campaign? Does he further recognise that the privatisation of the Post Office will damage rural post offices and delivery services? Rather than postpone privatisation, will he now abandon it?

The Prime Minister: As I indicated to my hon. Friend the Member for Rochford (Dr. Clark) last week, I believe, we have made no such proposals. Our policy is to encourage people to receive benefits via their accounts while maintaining a viable network of post office outlets.

Several hon. Members: rose—

Madam Speaker: Order. Time is up. Statement, Mr. Secretary Clarke.

Mr. Rhodri Morgan: On a point of order, Madam Speaker.

Madam Speaker: Order. Points of order come after statements.

Criminal Justice

The Secretary of State for the Home Department (Mr. Kenneth Clarke): With permission, I should like to make a statement about the criminal justice system.
The House will recall that on 14 April it gave an unopposed Second Reading to the Criminal Justice Bill dealing with money laundering and other financial crimes. That Bill had already been considered in another place.
The House of Lords authorities had taken a narrow view on what was within the scope of the Bill. At the time of Second Reading in this House, I explained that I had been advised that we would therefore be unable to use the Bill to improve the working of the Criminal Justice Act 1991.
However, two days ago I was told that the authorities of the House of Commons might take a different view. I therefore might now have an unexpected and welcome opportunity to bring before the House in this Session of Parliament amendments to give effect to commitments that I have already made to amend the 1991 Act. That Act is plainly not working as Parliament would have liked, and it is clearly in the interests of justice that I should move to put matters right quickly, now that I do have this welcome opportunity.
Subject to the approval of the appropriate authorities in the House, therefore, I intend to table amendments to the present Criminal Justice Bill which will deal with the problems of the Criminal Justice Act 1991 and also strengthen the powers of the courts in other important respects.
First, we will seek to amend section 1 of the 1991 Act so as to allow the courts to take into account all the offences for which the offender is being dealt with, instead of only one offence, or that offence and one other offence, which is the case now.
Secondly, we propose to restore to the courts their power to have full regard to the criminal record of an offender and his response to previous sentences when deciding on the sentence for his current offences. We will do this by repealing section 29 of the 1991 Act, which prevents a court from regarding an offence as more serious by reason of any previous convictions of the offender, or his failure to respond to previous sentences.
These changes, which I wish to see made to the 1991 Act, will make it clear that sentencers have all reasonable discretion to decide upon the right sentence in a particular case, bearing in mind the seriousness of the offences being dealt with, all the circumstances of the offender and his offending behaviour.
We will ensure that the law allows the courts to exercise judgment and common sense within a sensible legal framework that allows justice to be done in the interest of the public, the victim and the offender.
So far as fines are concerned. I am quite satisfied that courts should continue to have regard to the particular circumstances of individual offenders—in particular, to their means to pay—when fixing the level of a fine. I have been equally clear for some time, and I have frequently said, that we should not require magistrates' courts to go through the mechanistic provision currently required under the unit fine arrangements. My hon. Friend the Member for Fylde (Mr. Jack), Minister of State in my Department, and I have been seeking for some time

modifications that we might make to the rules of the unit fines scheme to produce better results. We have now concluded that it is not possible to do so.
Accordingly, I now propose to abolish the unit fines system and replace it with provisions which will require magistrates fully to consider an offender's means when imposing a fine but which will not require them to fine by application of any mathematical formula. [Interruption.] I get the sense that this change will be widely welcomed, not least by magistrates outside the House.
I will also—again, subject to the judgment of the House authorities—seek to table further amendments to the Criminal Justice Bill currently before the House which will give to the courts the statutory power to increase sentence for those who offend on bail. We will also be seeking to fulfil our undertaking to increase the maximum sentence for causing death by dangerous or drunken driving from its present five years to a new maximum of 10 years' imprisonment.
There are many other improvements to the criminal justice system and the powers of the courts which I intend in due course to bring before the House. We are also awaiting the report of the Royal Commission on the criminal justice system. At this stage of this Session of Parliament, it would not be prudent to introduce more complex amendments to the law and new criminal offences which might require extended parliamentary debate. I hope to have an opportunity to introduce further criminal justice measures in fresh legislation in the reasonably near future.

Mr. Tony Blair: First, I welcome the Home Secretary's statement on the shambles of the Criminal Justice Act 1991. We are surprised, however, that he has not seen fit to make a statement specifically on the allegations that there has been illegal bugging of the conversations of the royal family—allegations that are directly relevant to criminal justice. I should like to put to the Home Secretary one question about this matter. Either the transcripts that are circulating are forgeries, in which case a serious offence of criminal fraud has almost certainly been committed, or they are genuine, in which case a gross intrusion of privacy by illegal—[Interruption.]

Madam Speaker: Order. If hon. Members were listening to the statement of the Secretary of State, they will remember the final paragraphs. Will the hon. Gentleman keep that in mind?

Mr. Blair: Either these transcripts are forgeries, in which case a serious offence of criminal fraud has almost certainly been committed, or they are genuine, in which case a gross intrusion of privacy by illegal means has taken place. In either event, given that the Home Secretary is responsible for both criminal justice and issues concerning the royal family, are not these matters ripe for serious and urgent investigation, irrespective of the position of the security services?
I should like now to deal with the Criminal Justice Act. Never have we seen so quick a collapse of Government policy, even for the present Government. In dealing with the worst abuses of the Act, the Home Secretary will have much support. I am surprised that he did not pay tribute to the private Members' Bills of my hon. Friends the Members for Warwickshire, North (Mr. O'Brien) and for St. Helens, South (Mr. Bermingham).
I should like to press him on one central matter. Having spent weeks, if not months, robustly telling us that the Criminal Justice Act had a lot to commend it, he now equally robustly tells us that he must scrap its central provisions. Does he not understand that the problem with which the Criminal Justice Act sought to deal is arbitrary and inconsistent sentencing, and that it is therefore important that he should not scrap the Act and leave a dreadful hole
?
Is there not therefore now a clear and urgent need for proper sentencing guidelines? Otherwise, the very difficulties that gave rise to his predecessor's legislation and the reasons for his support will recur, and one ill thought out proposal will simply be replaced by another.
May I also ask the right hon. and learned Gentleman why he is not trying to deal with other abuses of the criminal justice system? First, does he know that, because of the rising scandal of delays and adjournments in the criminal courts, it takes six months or more for many cases to reach a hearing? Is it not high time that the operation of the courts was overhauled thoroughly and they were run not for the convenience of those who administer the system but in the interests of justice for those who use it?
Secondly, does he know that, according to his own figures, the number of cases discontinued by the Crown Prosecution Service has risen by over 20 per cent. in a year? Is he aware of, and will he comment on, the concerns of the police and prosecution services that many cases are discontinued, not on public interest grounds or for lack of evidence but because of pressure on resources? Is that right?
Thirdly, is not one abuse of the system the treatment of victims? Why will the Home Secretary not support us in saying that the Crown Prosecution Service should be legally obliged, before dropping or amending charges, especially in cases of rape or assault, fully to consult the victim? Above all, will he confirm that the level of crime is such that only one in 23 cases ever results in a conviction or caution? Therefore, may I urge him once again to rethink his strategy on crime prevention and accept the advisory report that was published in his office two years ago?
There is little point in drawing attention, as the Home Secretary does, to the link between crime and drugs, and then cutting drug advisory posts. There is little use in worrying about the appalling rise in truancy, with tens of thousands playing truant every day, and cutting the funding for truancy officers in local authorities. There is little chance of young people learning self-respect when thousands of them have to leave school every year and face nothing better than a life on the dole.
May I tell the Home Secretary that there is a possibility of establishing a broad basis of action on criminal justice, but to do that the Government must learn not just to rectify sensibly the mistakes for which they were responsible in the past, but to think through a coherent policy for the future to fight both crime and its underlying causes, so that the plague that makes life hell for millions of people in local communities can be addressed with the seriousness of purpose which they desperately wish to see?

Mr. Clarke: I find the hon. Gentleman's choice of priorities in politics utterly absurd. We are considering extremely important matters about the powers of the courts to deal properly with offenders who appear before them. Yet he kicks off by making his first priority,

presumably placed on behalf of the Daily Mirror, to try to sell rather sleazy royal books, asking me to inquire into ridiculous allegations for which he knows well that there is no shred of support. He is a tabloid politician, unable to turn his attention to serious criminal matters.
My hon. Friend the Member for Canterbury (Mr. Brazier) is among those who have been pressing me for legislation to address the 1991 Act. I have been saying for some time that I do not like the way the Act has been working. Most hon. Members and magistrates do not like the way it has been working. We can now take action to get it into the shape that it ought to have been.
The hon. Member for Sedgefield (Mr. Blair) has kept his head down on the subject. A few moments ago, he gave those warnings about arbitrary sentencing, which were used in the speeches of his hon. Friends when they supported the legislation which tried to put in place mechanistic constraints on the courts, which in practice, as we all know, have not worked out properly. If he can turn away from royal scandals, buggings and matrimonial quarrels, he will have a chance to decide how he will vote on some things which matter to real men and women throughout the country.
I assume from what the hon. Gentleman has said that he will support the changes which I propose to the 1991 Act. I wish I always had that docile acquiescence from my opposite number on everything I propose. He has not yet made up his mind about bail and whether he approves of the proposal that we give the courts the statutory power to increase the sentence of those who offend on bail. [HON. MEMBERS: "What about Asil Nadir?"] Perhaps the thought that, when we get Mr. Asil Nadir back, we will give the court a power that it now lacks to add to the sentence if he is convicted and if he commits further offences while on bail will prompt Labour Members to support us, but hitherto they have not supported sensible propositions in this field at all.
The hon. Member for Sedgefield has not yet made up his mind whether to support the increased penalty for causing death by dangerous or drunken driving—we shall see where we get to on that proposal. He gave us his usual litany about how important it is to go back to the Morgan report and examine whether local authorities should have a statutory duty in crime prevention. As far as I can see, that is the only original insight into crime that the Labour party has had so far in its new guise.
When the hon. Gentleman says that cases are discontinued for lack of resources, he plainly ignores the amount of resources that we are putting into the police and criminal justice system. It may be the burden of paperwork which has been imposed on those who arrest, prosecute and take people from arrest to trial by various people with well-intentioned reforms over the years that needs to be addressed. That is why I have set up an inquiry into the matter—we look forward to the report. As the hon. Gentleman knows, the other matters to which he referred are not within my area, so I should not dilate on the drive that my right hon. Friend the Minister is having on truancy and the £10 million campaign that he has already carried forward.
Today, I have announced the next stage in a package of measures to give the courts a proper range of powers so that they can exercise their discretion, judgment, and mercy on occasions, as well as their proper regard for the public interest of others, when they deal with those who are brought before them. Labour Members have not given


serious thought to the matter. Perhaps, when this Bill comes before the House, at least they will have the decency to allow it a reasonably quick passage in its amended form.

Sir John Wheeler: Does my right hon. and learned Friend agree that the Government have done much to strengthen the criminal justice system by one of the largest increases ever in appointments of Her Majesty's judges to the High Court bench? Does he further agree that his statement to the House today, arising from his listening to his colleagues on the Conservative Benches and the public more generally, will do more to engender confidence in the criminal justice system than ever before?

Mr. Clarke: I am grateful to my right hon. Friend for his reminder that we have strengthened the courts to deal with the weight of work before them—I am grateful for his support. His advice has been invaluable in our consideration of the way in which the Criminal Justice Act has been working. I look forward to having similarly constructive advice during the passage of this Bill and the other criminal justice Bills which we intend to introduce in due course.

Mr. Robert Maclennan: Is it not utter gall on the part of the Home Secretary to attack the Opposition spokesman for seeking to catch headlines when the whole of this operation is designed to catch a headline, "Crackdown on Crime", in the face of escalating crime figures which are without parallel in our history? Is it not monstrous that he should bring forward a total reversal of policy, which was commended to the House only two years ago by another instant governing Home Secretary as the answer to the problem of inconsistency in sentencing, to further his own petty personal policies?—[Interruption.]

Madam Speaker: Order. The House must come to order.

Mr. Maclennan: At a time when the royal commission is reaching its final conclusions, the Home Secretary has the effrontery and lack of sense to introduce ill thought out measures at a time when he does not even know whether Parliament is allowed to consider them. Surely it is time that he sat on the back burner and allowed sensible debate to take place in the House.

Mr. Clarke: In response to the hon. Gentleman, I ask him to go away, lie down in a dark room, keep taking the tablets and think carefully about whether the Liberal Democrats have an opinion one way or the other on the merits of any of the proposals that I have just announced.

Mr. Michael Shersby: The Home Secretary's announcement this afternoon will be warmly welcomed not only by my constituents but by the Police Federation and its members up and down the country. All hon. Members in the House, bar one or two, know that his common-sense decision to allow the courts access to previous criminal convictions must be right. I hope that it will help to put behind bars burglars who pester the private homes of all our constituents.
Can my right hon. and learned Friend tell us what proposals he has for restricting the bail granted to, in

particular, young people, who often go through what the police regard as the revolving door of arrest, bail, further offending, bail and so on? How will that work?

Mr. Clarke: I am grateful to my hon. Friend, who takes a close and continuing interest in matters connected with policing. I am happy to confirm that we will give the courts power to consider previous convictions, among other things.
The men and women we appoint to the bench, be they judges or magistrates, are expected to bring civilised common sense and judgment to their task. They must be allowed to examine all the relevant circumstances, the nature of the offence, the offender's background, whether he has committed crimes before and how he has responded to earlier sentences. They must bear those factors in mind when passing a sentence that matches the seriousness of the offences of which the offender is now guilty. I believe that that approach will be welcomed by serving police officers who take those whom they arrest to the courts, as well as by all right-thinking people who want justice to be done.
My hon. Friend also raised the extremely complex issue of the way in which out-of-control young people should be handled—for instance, how those who are currently given bail before being dealt with by the youth courts should be remanded. That question takes us into much more complicated areas. In many ways, I should like to present provisions related to the treatment of young people in the form of amendments to this year's Criminal Justice Bill. We are now in May, however; I have been given the unexpected and welcome news that the proposed amendments are acceptable, but I think that we shall have to wait for later legislation to tackle such a complex matter properly, thus satisfying the legitimate public concerns voiced by my hon. Friend.

Mrs. Alice Mahon: I welcome the abolition of the unit fines system, but will the Home Secretary now apply his mind to the victims of the massive escalation of crime by funding victim support properly and on a proper basis, funding the youth service which literally keeps young people off the streets and recognising that local authorities can play a legitimate positive role in dealing with crime? Above all, will the right hon. and learned Gentleman urge his colleagues to provide 16-year-olds with benefit, jobs or at least some stake in the future? At present, they have none.

Mr. Clarke: We have built up the concept of victim support panels; I agree with the hon. Lady about their value. We continually increase the resources that we provide for such panels, and also give financial compensation to crime victims through the Criminal Injuries Compensation Board. Such compensation is now provided on a considerable scale. We are readdressing the quality of service and the promptness of the payments.
We have developed the idea of crime prevention panels, which is 25 years old. Youth crime prevention, however, is a particularly important issue, and we continue to support and build on the necessary measures in every possible way. I do not deny that local authorities can play a very useful role in crime prevention: indeed, such a role is played by authorities up and down the country. However, I dispute the narrow point about whether we should lay a new statutory duty on them. The hon. Member for Sedgefield


seems to cling obsessively to that idea. It is not a great centre of policy, as he suggests; it is a footnote to activities that are taking place throughout the country.
Of course it is important for young people to have a purposeful occupation. That is why all the relevant agencies must be involved—local authorities, the education service, the police and others—and why we take every opportunity to support any measure that provides young people who may risk becoming offenders with the chance of some purposeful activity and outlet for their energies. None of that, however, avoids the need to give the courts the power they require to protect the public against those on whom such measures have no effect—those who desire to commit crime and who need to be punished in a way that the public consider fit.

Sir Peter Emery: Many people throughout the country will praise my right hon. and learned Friend for his willingness to admit that we have made mistakes. He has listened to the comments that have been made, and come forward to correct the errors.
May I urge my right hon. and learned Friend to try to find time to implement his announcement about secure training orders in the new amendments? Many people, particularly the police, are most concerned that we cannot deal with those young people aged between 12 and 15 who are consistently out of control, when the court has no power to lock them up or restrain them. If Government policy could move towards achieving that, it would be welcomed by both the police and the general public.

Mr. Clarke: I have announced my intentions, and I am grateful for my right hon. Friend's support. I have considered that specific factor, but I do not think that it would be sensible for me to place before the House authorities possible amendments on that issue, which requires greater development of the proposed legislation than can properly be considered in the House and another place in the time remaining in this parliamentary Session.
I do not think that it would save a great deal of time to seek to legislate now in a hurry, because we still have to develop the concept of such institutions. We must have places to which the hard-core persistent offenders can be sent where we can be sure that the regime is suitable for delinquent school-age boys, and is likely to give them the quality of education and training they require when they are locked up to prevent them from harming themselves and the public.

Mr. Dennis Skinner: In the light of the massive changes that the Home Secretary has announced today, where people have been fined £400 or £500 for traffic offences and the cases have not gone to appeal, or where fines have been paid over a period of months or weeks and have not yet been paid in full, will those large fines be reduced and will transitional payments be reduced? Thousands of people feel that they have had a raw deal. If the law is to be changed, the changes should be retrospective.
Will the Home Secretary explain how he can talk about bail in the light of what Asil Nadir did the other week when he flew the coop, some say with the help of the Government as he paid £440,000 to the Tory party—and he who pays the piper, calls the tune?

Mr. Clarke: On the hon. Gentleman's first question, large numbers of people are appealing against the fines

imposed on them, and quite large numbers have been successful in getting the fines reduced. The Crown court is able to correct on appeal some of the stranger fines which have been imposed—that process will continue. It is up to the House to change the law in future and give the magistrates courts the full discretion they require. Not all the reported cases of high fines are as outrageous as they are sometimes made to appear, although some are absurd, as I have said.
However, some are a slip—it is not necessary to regard the £100 unit as essential when someone has not filled in the form. For example, in the notorious case of the man who was fined £1,200 for dropping a crisp packet, the fine was reduced to £48 on appeal to the Crown court. The fine might have been lower if someone had asked the man to fill out a form at the magistrates court before the first £1,200 fine was imposed.
There is a process under which people can appeal against sentences which they feel are wrong, and have them put right. Some of those who complain to the newspapers have committed serious offences, and I have read of some cases that made me surprised that those involved were not sent to prison rather than being given a large fine. Parliament approved raising the maximum fine to £5,000—a fine is a proper penalty for people with the means who have committed serious offences.
I do not believe that the hon. Member for Bolsover (Mr. Skinner) is seriously maintaining that the Government supported Asil Nadir's escape. If he is, his accusation is groundless and ridiculous, and there is no shred of evidence to support it. His claim is about as daft as his hon. Friend the Member for Sedgefield believing that spies are bugging royal marriages.

Dame Elaine Kellett-Bowman: Does my right hon. and learned Friend accept that my constituents will be delighted by the proposals that he has announced today, particularly as they have suffered as a result of people who have reoffended while on bail? Will it be made clear in the amendments that it is not only parents who are responsible for their children's behaviour, but county councils such as Lancashire county council, into whose care they have been committed? Does he not deplore the fact that the county council appealed against the damages levelled against it for offences committed and damage caused by the children who had been in its care?

Mr. Clarke: The Act applies to local authorities with children in their care as well as to parents, and I agree with my hon. Friend. Some local authority homes are the principal centres of car crime and burglary in their areas. I have some sympathy for those in charge of the homes, however. Following the Children Act 1989 and the guidance issued under it, a great deal of litigation has ensued in the name of children's advocacy; and it has been extremely confusing to be buffeted between the following competing demands—those living near the homes need to be protected from burglary; at the same time, there are the constant worries about the abuse of children and the use of excessive force.
I welcome the guidance recently issued by my colleague in the Department of Health which made it clear that the staff have the legal power—and, in my opinion, the duty —sometimes to impose restraint on young people in their care who are likely to do harm to themselves or others. I am sure that my hon. Friend is looking at that guidance in


more detail to ensure that we eventually arrive at a commonsense balance that protects children from abuse by those in charge of them and also protects neighbours and local people from crimes committed by children who are completely out of control and who cannot be restrained when the police return them to the children's home from which they have come.

Several hon. Members: rose—

Madam Speaker: Order. I am always keen, as the House knows, to call as many hon. Members as possible, but the House makes that extremely difficult for me when Members ask long questions and make long comments. It is equally difficult when Ministers give very long answers. I hope that what I have said has been taken to heart by all concerned.

Mr. Greville Janner: I welcome the Minister's intention to get rid of the unifying system which, in practice, has so often worked out unfairly. Will the right hon. and learned Gentleman tell magistrates what they are to do in the meantime? Has he not advised magistrates to use their discretion? The Justices' Clerks Society has advised magistrates that, in its view, to do so would be unlawful. So what are magistrates to do until the system is changed?

Mr. Clarke: The Magistrates Association recently put out advice to its members shortly after it had held a meeting with me. I am glad to say that it was a productive meeting. We entirely agreed on what we wanted to restore to the courts. I believe that the guidance that the association put out thereafter was helpful and accurate.
I have not heard whether the Justices' Clerks Society is maintaining its opposition, but I think that it will find when it reads the guidance carefully that it is consistent with the Act.
One trouble is that practice has varied so widely from court to court. Sometimes courts have appeared to be acting in the belief that they have scarcely any discretion in the size of the unit or how they apply the system. A proper examination of the Act, even before we change it, will show that it does give magistrates courts much wider discretion than some of them have been led to believe in the early stages.

Sir Edward Heath: As my right hon. and learned Friend has said that he will consider other improvements while he is examining these questions, may I ask him to recognise that what worries many of us more than anything is the appalling slowness of the machinery of justice? While it may be necessary to consult the Lord Chancellor, can he give us an undertaking that he will look into that speedily; and that if more resources are required, in the name of British justice they must be provided?

Mr. Clarke: I entirely agree with my right hon. Friend. Incidentally, I was probably less than fair to the hon. Member for Sedgefield for not referring to what he said about how the courts are administered. I have considerable sympathy with his remarks.
The process of criminal litigation—of investigation and processing—now takes much longer than it did 10 or 20 years ago. That is partly inescapable, because of all the

additional safeguards introduced to protect yet further the rights of the accused and to guard against the problems of unfair convictions. I am not satisfied, however, that the process is conducted as expeditiously as it could be. I am not satisfied that it imposes the minimum office-bound duties on police officers.
There are too many court adjournments, a problem with which my right hon. and noble Friend is dealing. There are also many other aspects of the administration of criminal justice to which we should turn our minds. Some of them are far beyond my control—for instance, the average length of a criminal trial is almost invariably longer than it was 20 years ago, with no noticeably dramatic improvement in the quality of justice.
I accept that we should not look at the subject in a piecemeal fashion. The criminal justice system faces unprecedented burdens and demands today, but we must ensure that it responds expeditiously while remaining just in its conclusions.

Mr. Peter Mandelson: Resulting from the Home Secretary's initial response to my hon. Friend the Member for Sedgefield (Mr. Blair) and the comments that the Home Secretary made on television yesterday—that in all probability private conversations between the Prince and Princess of Wales had been bugged—would the Home Secretary confirm that if such bugging took place it was an illegal act, and that a proper police inquiry and investigation should take place?

Mr. Clarke: I did not say that bugging had taken place. Among the many absurdities appearing in today's press is a misuse of what I said. I was being pressed, ad nauseam, by a lot of journalists—some from newspapers trying to justify yet more pages of royal gossip—about the marvellous bugging that they were so interested in. As they went on, I am afraid that I treated with derision the suggestion that they had the slightest evidence that the bugging had anything to do with the security services. I was told that they had all the information, so I said, "Well, it appears that someone's bugging the royal family."
I have no more knowledge than the hon. Gentleman of whether the stuff is authentic. Having seen some of the people who were parading around yesterday, arguing about who would get money out of it, I am not sure that I am satisfied that any of it is authentic. It is absolutely absurd for the House to be taking up such nonsense at the behest of tabloid newspapers, when the rest of us are discussing serious matters of criminal justice and the powers of the courts.

Mr. Patrick Nicholls: My right hon. and learned Friend's statement will strike the people of my constituency—who have been writing to me in their hundreds—as according with the grain of common sense, which is exactly what they would expect from a Conservative Administration. They will also have noted the complete lack of support that the statement received from the Liberal Benches.
When my right hon. and learned Friend considers other measures in the same way, will he please consider the workings of the Police and Criminal Evidence Act 1984? As a practising solicitor, may I inform him that any solicitor would tell him that the Act is wide open for exploitation in the interests of criminals? The problem with the operation of the Act is that the balance between


the rights of the criminal and those of society has swung so far that the legislation is actively exploited in the interests of the criminal fraternity.

Mr. Clarke: I agree that common sense is one of the better qualities that can be brought to politics of all kinds. I am sorry that its application has finally sent the Liberal spokesman, the hon. Member for Caithness and Sutherland (Mr. Maclennan), rushing away to the refuge that I recommended to him. He has gone to confer with his colleagues.
On the second question, the introduction of taped interviews and so forth seems a valuable advance in criminal investigations, and I would not willingly sweep away the Police and Criminal Evidence Act. However, we are waiting for the royal commission, which must deal with the right balance between the demands of justice, the proper requirements of the public interest, and proper and sensible safeguards for the rights of the accused.

Mrs. Barbara Roche: Does the Home Secretary agree that the allegations about the security service bugging the royal family seek only to undermine confidence in the service? Does he therefore think that it would be a good idea for the Government to approve the recommendation of the Select Committee on Home Affairs that there should be parliamentary scrutiny of MI5?

Mr. Clarke: The House should not dance that sort of tune to the events of the past few days. We should devote the time of the House, and the efforts of those whom the Government ask to carry out inquiries, to serious matters, where there is some sort of evidence to be investigated. No serious person has come up with any evidence from which one could begin to investigate the rather daft allegation that MI5 is bugging the royal family—[HON. MEMBERS: "There is."). A mere suggestion in a favourite newspaper —it may not be your favourite, Madam Speaker —is not grounds for political debate or public inquiry.

Mr. Tim Devlin: My right hon. and learned Friend's proposals will be widely welcomed on Teesside, which unfortunately is the second worst area for car theft. I am told by local police that about 150 young people are perpetrating about 90 per cent. of the crimes. If the courts take all their previous offences—which are legion—into account as a result of today's proposals, will that mean that we will have to put more young people in secure accommodation? If so, is he satisfied that the 17 or 18 places that he has announced for the region will be sufficient? If they are not, will he provide more?

Mr. Clarke: There are strong feelings in all parts of the north-east, and that includes my hon. Friend's constituency, about persistent car theft by a handful of young people. The changes that I am proposing will mean that, when dealing with an offender of any age, the court will be entitled to look at all the offences that he has committed and for which he is before the court, and not just at the most serious and one associated with it. The court will be empowered to have regard to what has happened previously when other types of sentence have been tried. There may well be an even bigger demand for secure accommodation than has already grown up under some of the better provisions of the Criminal Justice Act 1991.
There is nothing to stop local authorities providing secure accommodation now, so long as they comply with

the requirements of the Children Act 1989. The policies of both the social services and local authorities have led largely to the dramatic decline of secure accommodation across the country, and many local authorities are still unwilling to extend any secure accommodation.
The Government make money available for small numbers of additional places, as my hon. Friend said, but we need to study the proposals made earlier this year about the secure training order and also look for other providers of secure accommodation apart from the social services departments if we are to meet the level of need in the north-east of England.

Mr. David Winnick: Why does not the Home Secretary take more seriously the allegations against the security service, bearing in mind the fact that previous allegations about the security service that were denied turned out to be true? Why does he not bear in mind that the feeling of many hon. Members, which I raised at the last Home Office Question Time, is that the Security Service should be fully accountable to Parliament, as in other western democracies? What is so wrong with that, and why does he dismiss it? The Opposition require no lectures on crime from the Government, bearing in mind what has happened in the past 14 years.

Mr. Clarke: The Security Service is subject to my supervision as Home Secretary, as it has been with succeeding Home Secretaries. It is also subject to supervision of the commissioner, Lord Justice Stuart Smith. The Master of the Rolls is also empowered to supervise the security services and has reported that he is quite satisfied—I do not use his exact words—that the Security Service has not been involved in those matters. So a High Court judge, who is the commissioner of the Interception of Communications Act 1985, can find no evidence of such involvement.
Some people are obsessive about anything to do with both the security services and with the royal family. I said yesterday, and I am sorry to repeat it, that if the hon. Gentleman asserted to me that the moon was made of green cheese—which he might—I would investigate it if he could produce anyone who had even seen that the moon was made of green cheese or had a crumb of cheese from the surface. However, the mere assertion in whatever newspaper the hon. Gentleman has read that MI5 is involved is not a basis for setting aside all the statutory controls that the House has agreed or for pandering to newspapers and to people trying to make a quick buck from nasty books.

Mr. John Greenway: My right hon. and learned Friend's statement will, I am sure, help magistrates and courts to give priority in sentencing to the victims and not to the criminals. Therefore, will he confirm that it is not his intention in any way to interfere with those parts of the Criminal Justice Act 1991 that are working extremely well? They include stronger parental responsibility, tougher sentences for those who commit violent and sexual crimes, reform of parole and tougher community sentences.

Mr. Clarke: Those provisions are indeed all working well. They are quite essential, and I think that we have now sorted out the way in which those provisions are working and put them in line with what I believe the House


intended. The Criminal Justice Act 1991 will be seen as yet another improvement to the criminal justice system, strengthening the hands of the police and the courts.

Business of the House

Mrs. Margaret Beckett: Will the Leader of the House state the business for next week?

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): Yes, Madam. The business for next week will be as follows:
MONDAY 17 MAY—Until seven o'clock, private Members' motions.
Motion relating to the Cardiff Bay Barrage Bill.
The Chairman of Ways and Means has named opposed private business for consideration at seven o'clock.
TUESDAY 18 MAY—Motion for the spring Adjournment.
Remaining stages of the Foreign Compensation (Amendment) Bill [Lords].
WEDNESDAY 19 MAY—Opposition day, 12th allotted day. Until about seven o'clock, there will be a debate described as "Automated Credit Transfer and the Threat to Sub-post Offices", followed by a debate described as "The Destruction of Britain's Defence Industrial Base". Both debates arise on Opposition motions.
THURSDAY 20 MAY—European Communities (Amendment) Bill, Third Reading.
FRIDAY 21 MAY—Debate on Government support for exporters, on a motion for the Adjournment of the House.
MONDAY 24 MAY—Progress on the remaining stages of the Railways Bill.
The House will also wish to know that, on Wednesday 19 May, at 10.30 am, European Standing Committee A will meet to consider EC documents relating to the slaughter of animals, and European Standing Committee B to consider documents on the protection of young people at work.

[Wednesday 19 May:

European Standing Committee A

Relevant European Community Documents:
9880/91 10306/92} Slaughter of animals

Relevant Reports of the European Legislation Committee:
HC 24-x (1991–92), HC 79-xxiii (1992–93), HC 79-xvi (1992–93), HC 79-xxviii (1992–93) HC 79-xix (1992–93),

European Standing Committee B

Relevant European Community Documents:
5378/92 4690/93} Protection of young people at work

Relevant Reports of the European Legislation Committee:
HC 79-iii (1992–93), HC 79-xxvi (1992–93), HC 79-xxiv (1992–93), HC 79-xxviii (1992–93.]

Lastly, I hope that it will be for the convenience of the House to know that, subject to the progress of business, it will be proposed that the House should rise for the spring Adjournement on Thursday 27 May until Monday 7 June. In case anyone has forgotten what was announced provisionally, I point out that that means one day's extra holiday.

Mrs. Beckett: I feel sure that the House will wish to thank the Leader of the House for his statement. I had not forgotten what was originally announced, but it is useful to be reminded. Am I right in assuming that there will be no parliamentary questions on the Thursday on which the House rises for the Whitsun recess?
On a number of recent business question days the Leader of the House has been good enough to say that he is trying to keep up a record of accepting one of our proposals a week, so may I offer him this week two long-standing options from which to choose? First, as the right hon. Gentleman will know, we are seeking a debate in Government time on two Scottish issues, one of which is the important issue of water privatisation in Scotland, on which yet again fresh conflicting statements seem to be coming from the Scottish Office and elsewhere. As for the second Scottish issue, the right hon. Gentleman will be aware that we have sought a debate in Government time on the White Paper on what the Government call the stocktaking exercise concerning powers in Scotland.
My second range of options involves defence. Despite the fact that we are devoting half of our Supply day to defence, we are aware, as we feel the Government should be, that it is now two years since we debated the defence estimates. The Leader of the House will be aware that such a form of debate offers an opportunity for wide-ranging discussion, and I am sure he knows that it has been suggested that the Government have avoided scheduling a debate for such a long time because they feel some embarrassment at the criticisms that they may face, perhaps even from their own party. However, I know that the Leader of the House takes the view that it is not up to the Government to run away from parliamentary scrutiny of difficult issues and that, indeed, they should ensure that the opportunity is offered. Especially in the light of what has happened to Swan Hunter today as a result of some defence decisions, I hope that the right hon. Gentleman will consider finding time for a debate.
Finally, will the right hon. Gentleman and his right hon. Friends consider keeping the House informed by means of updating statements on the position in Bosnia?

Mr. Newton: I thank the right hon. Lady for the generally constructive spirit in which she again seems to approach her task, and for her kind comments about the constructive spirit in which she, rightly, thinks that I am approaching my task.
I shall take the right hon. Lady's questions in reverse order. I can certainly give her a general assurance that if it seemed right that a further statement should be made about significant developments concerning Bosnia, I should of course seek to arrange that.
I can assure the right hon. Lady that there is no question of the Government's seeking to avoid embarrassment on the defence estimates. The difficulty is that of fitting in the debate, but I shall certainly seek to do so, and we can continue to discuss the matter through the usual channels. The right hon. Lady's question was perhaps a little unkind in view of the fact that several days have been made available for discussing defence matters over the past month or two. If the anxiety was about embarrassment, I do not think that we would have scheduled those as we did.
The debates that the right hon. Lady seeks on Scottish matters, too, should be further discussed through the usual channels, although in the case of water privatisation it

would seem to me to be more sensible for a debate to take place when the Government have reached and announced conclusions.
In response to the right hon. Lady's specific first question, I can confirm that it is not proposed to take questions on Thursday 27 May.

Mr. Peter Luff: Has my right hon. Friend seen early-day motion 1877 on fairer trade with the third world?
[That this House recognises that fair trade is as important as aid in tackling Third World poverty; notes that the Multi-Fibre Arrangement, which directly discriminates against poor countries' clothing and textile exports, denies poor people vital jobs; further notes that the EC has already agreed to start lifting quotas on clothing and textiles from East and Central Europe despite the failure to conclude a GATT agreement, while restrictions against the world's poorest countries have been extended once again; believes that the British Government, through its participation in the EC, the GATT negotiations and the G7 Summit in Tokyo this July, is well placed to take a lead in lifting trade barriers which discriminates against poor countries; and therefore urges Her Majesty's Government to press the EC to start the 10 year phase out of the Multi-Fibre Arrangement, bringing out the poorest countries first and fastest.]
Does he agree with me that, although it is entirely right that the House should be concerned about the crisis in the former Yugoslavia, many millions of our fellow human beings throughout the world are suffering poverty, malnutrition and starvation as a result, in large part, of the unfair trading patterns in the world? Will he find time for an early debate in the House on this matter?

Mr. Newton: While I cannot promise my hon. Friend the early debate that he wants, although I will certainly bear in mind his request, I can most certainly join with him in the general proposition that an open multilateral trading system is of great importance to what is called the third world. Indeed, it is for that very reason, among others, that we as a Government, and I think the whole House, place so much importance on a satisfactory conclusion to the GATT round.

Mr. Dennis Canavan: May we have a statement this week, or at the latest next week, on water privatisation which in England and Wales has led to about 50,000 homes being disconnected and 10,000 cases of dysentery? In view of the recent reports about a possible Government U-turn on Scottish water privatisation, may we have a clear and unequivocal statement at the earliest opportunity that Scottish water will remain in full public ownership, otherwise water privatisation will do for this Government what Watergate did for Nixon?

Mr. Newton: I cannot add to what I said, partly explicitly and partly by implication, to the right hon. Member for Derby, South (Mrs. Beckett). All the options set out in the consultation paper called "Investing for Our Future" are being considered, and the appropriate time for debate, in my view, is when conclusions have been reached.

Mr. Harry Greenway: Will my right hon. Friend find just a short slot to enable hon. Members to pay a tribute to our late hon. Friend Robert Adley? [HON. MEMBERS: "Hear, hear.] He was my neighbour in the House and my near neighbour, and I frequently had the honour and pleasure of driving him to and from the


House, particularly on days when he was far from well. He was one of the great characters of the House, a man of great courage, strength and determination. His wife Jane has been through it these past few weeks. I am sure that we would all like to send love to her and expressions of support to her family.

Mr. Newton: I am sure that you agree, Madam Speaker, that the response from both sides of the House to my hon. Friend's remarks shows that he is exactly right, and I feel that you too will wish to be associated with them. I certainly wish to be. I had a huge regard for Robert, and I believe that he will be missed on both sides of the House.

Mr. Nigel Spearing: Does the Leader of the House agree that, if sufficient members of the public in Denmark go along with the view of Her Majesty's Government that the Edinburgh decision makes no change whatsoever in their citizenship or national obligations, there may be need for a statement adjusting the business for a week today? Will he undertake that, if there is no acceptance of the question that is being posed to the Danes, that business will be changed?

Mr. Newton: I certainly do not anticipate that need, but obviously Her Majesty's Government always consider changes in circumstances as may be appropriate.

Mrs. Cheryl Gillan: My right hon. Friend is no doubt aware of the great concern felt by several hon. Members at the delay in the Second Reading of the Crossrail Bill. There is a lot of interest among my constituents in Chesham and Amersham and also by the corporation in London, and increasing concern about the delay. I hope that, as the consultants' reports are with Ministers, my right hon. Friend will give an undertaking that the Bill will be brought before the House very soon.

Mr. Newton: I am certain that my hon. Friend is aware of some observations that I made on that matter last week. As she rightly says, the consultants' report has been received and my right hon. Friends are considering its conclusions. I am afraid that I cannot today, much as I would wish to have the chance to hear her, go beyond what I said last week.

Mr. Max Madden: As the horrors of Bosnia continue unabated, may I press the Leader of the House to press the Prime Minister, as opposed to other Ministers, to make a statement early next week about what action the Government and the international community will take to end all aggression in Bosnia, to secure an effective ceasefire and to defend the so-called United Nations-protected areas?

Mr. Newton: It was within my hearing and, no doubt, the hon. Gentleman's that my right hon. Friend made some further observations—albeit briefly of the sort that are possible in Prime Minister's questions—only a few minutes ago. I should have thought that my right hon. Friend, my right hon. Friend the Foreign Secretary and others had made it amply clear over many weeks that they are concerned to do everything that they practicably, possibly and sensibly can to achieve the objectives that the hon. Gentleman has in mind.

Mr. Barry Field: Would it be possible for my right hon. Friend, in the interests of open government, either to arrange a debate or to publish the arrangements by which various Departments bid for time and legislation in the Queen's Speech? There appears to be an ethos, supported throughout the House, that careers are judged on the quantity of legislation that is pressed through the House. If I judge the mood of the country correctly, there is a feeling that there should be a lighter regime altogether.

Mr. Newton: Although that issue is not, as it were, constitutionally tied to my present capacity, my hon. Friend's question is directed to the right quarter as it is a matter of public knowledge that I am Chairman of the Committee, whose initials are FLG, that examines those matters. I hope that when the proposals finally see the light of day my hon. Friend will feel that we have had some regard to his strictures. On the other hand, one has only to be present in this House week by week to know of the number of vigorous demands for legislation in particular that come even from those who are against legislation in general.

Mr. Paul Flynn: Is it not time that we had a debate about the serious crises that are building up in the former communist states? Has the Leader of the House seen the statement by Mr. Dashiyn Byambashurian, who resigned from the Great Hural and from his position as Prime Minister of Mongolia because he feared that the country was returning to communism? The crises in that country—and in many others—of finance, of shortage of fuel and of famine are so serious that the population are moving away from their centrally-heated homes and going back to live in medieval yurts which were used thousands of years ago. Is it not true that Britain, by promoting well-intentioned reforms in the former communist countries, is in grave danger of re-creating the tyrannies that they are designed to destroy?

Mr. Newton: All of us, I am sure, are concerned about many of the stories that we read about some of the countries that have been undergoing political and economic change. I cannot give the hon. Gentleman an undertaking that we shall have a debate on that matter, and certainly not next week.

Mr. David Madel: On next Wednesday's business on sub-post offices, is my right hon. Friend aware that wild, false rumours are running riot about possible wholesale closures of sub-post offices and the interruption of benefits and pensions? Would my right hon. Friend put on his former social security hat to ensure that the Government have an immediate advertising campaign in newspapers and on television to put the record straight and to state that sub-post offices will remain open and that pensions will still be paid —

Madam Speaker: Order. It is a very good try, but the hon. Gentleman is really asking a substantive question on that matter, which is not now the responsibility or the duty of the Leader of the House. If he asks a question about next week's business, that is another matter.

Mr. Madel: I thought that what I said might help next week's business in relation to Wednesday—

Madam Speaker: Order. The hon. Gentleman is seeking an advertising campaign. What he should be seeking is a statement in next week's business. Is that possible?

Mr. Newton: I will draw the attention of my right hon. Friend the Secretary of State for Social Security to my hon. Friend's request for him to make a particular point about the matter in the speech that he may have the opportunity to make next week. Apart from that, I draw my hon. Friend's attention to what I thought were the clear-cut remarks of my right hon. Friend the Prime Minister an hour or so ago.

Mr. Nigel Jones: Can the Leader of the House reveal when the Bill on the security services and Government Communications Headquarters will be published? Will he find time for an early debate on the scrutiny of those services because many of the talented people who work in them feel aggrieved that they are unable to answer the allegations contained in newspapers this week?

Mr. Newton: I note the point that the hon. Gentleman makes in the latter part of his question, but cannot promise an early debate on that nor, for reasons that I am sure he will understand—not least because the Government's proposed programme of legislation for the next Session is currently under discussion—can I give him a precise date for the publication of a particular Bill.

Mr. David Lidington: Further to his answer to our hon. Friend the Member for Chesham and Amersham (Mrs. Gillan), will my right hon. Friend convey to his ministerial colleagues the frustration and resentment of my constituents in Aylesbury and many thousands of other people in Buckinghamshire that the crossrail project is subject to so much delay and uncertainty? Will he give Ministers an early opportunity to say that this project has their approval and that they will press ahead with the Second Reading of the Crossrail Bill?

Mr. Newton: I note genuinely that this is the third time that one of my hon. Friends has raised this matter in the course of a fortnight. I am sure that it will also have been noted by my right hon. Friends who, I think rightly, wish to have a proper opportunity to consider the consultants' report. My right hon. Friend the Secretary of State for Transport will be here to answer questions on Monday 24 May.

Mr. John McFall: The Leader of the House mentioned the FLG Committee. He will be aware, therefore, of correspondence between the Secretary of State for Scotland and the Chancellor of the Duchy of Lancaster regarding the privatisation proposals for 8,000 jobs in the Scottish Office and a potential threat to up to 50,000 jobs. The letter shows that several Cabinet Ministers are acting in concert to avoid public scrutiny of legislation which they would need for specific functions regarding privatisation and that, instead, they intend to produce an omnibus Bill in the Queen's Speech in October.
Given that what we are witnessing by these covert actions is the possible loss of hundreds of thousands of civil service jobs and the demise of the United Kingdom civil service as we know it, will the Leader of the House consult his colleagues and ensure that there is an urgent and extensive debate on this issue next week?

Mr. Newton: I cannot undertake that there will be an urgent and extensive debate on this matter next week, but I take note of the hon. Gentleman's question and will bring it to the attention of my right hon. Friends.

Mr. Stephen Milligan: Will my right hon. Friend find time for a debate on the successful introduction of the council tax? Is he aware that in my constituency half the people who have telephoned the council are asking why their bills are so low and that the only serious complaint has come from elderly single people living in large houses who, although they face a serious problem, are perhaps not quite aware how much they would suffer if the Opposition's policy were introduced?
May we also discuss the preposterous claim by the Opposition, repeated in two successive party political broadcasts, that the council tax is £14 lower in Labour councils than in Conservative councils? Is not the truth that it is a statistical fiddle and that, if like is compared with like, that is to say, properties of the same value, the true position is that the tax is £107 lower in Conservative councils?

Mr. Newton: On the latter point, it is clear that the hon. Member for Blackburn (Mr. Straw), who speaks for the Opposition on these matters, has been forced to acknowledge on a number of occasions that the comparisons that he has made are completely bogus, for exactly the reason that my hon. Friend has given.

Mr. Doug Henderson: That is not true.

Mr. Newton: I have certainly not listened to everything that he has said, but I have read a good deal of it and that is the conclusion that I draw.
As to the first part of my hon. Friend's question, it is a considerable achievement of my right hon. and hon. Friends and also of local authorities throughout the country that the council tax has been introduced as smoothly as it has been.

Mr. John Spellar: May I draw the attention of the Leader of the House to early-day motion 1930 concerning May day?
[That this House appreciates the excellent weather that allowed the British people to celebrate and enjoy May Day on Monday 3rd May; and regrets the mean-spirited attempt by this Government to abolish this holiday, which is both a traditional British festival, and also celebrates the international solidarity of workers; and further deplores attampts to move the holiday into the cold, damp depths of autumn.]
Conservative Members have already commented on the effect that the abolition of the May day holiday could have on the hotel and leisure industry. Will the right hon. Gentleman prevail upon his right hon. Friend the Secretary of State for Employment to make a statement next week on the future of May day, and perhaps persuade her to take a positive attitude rather than her normal small-minded, petty, spiteful one of any institution associated with working people?

Mr. Newton: Having worked in a ministerial capacity for quite some time with my right hon. Friend the Secretary of State for Employment, when we were both in a previous incarnation, I did not recognise her from the descriptions and adjectives that the hon. Gentleman applied to her. An announcement on the question of May day will be made in due course.

Mr. Jacques Arnold: May we have a debate soon on the comments made earlier today in


Baghdad by the hon. Member for Glasgow, Hillhead (Mr. Galloway) to the effect that he is not there to help in the release of the two British detainees? Is it not very worrying that Iraq is being seriously misled by the two unguided missiles that have been sent there?

Mr. Newton: I hope that my hon. Friend will understand why I hesitate before commenting on a statement reported from Baghdad which I have not had an opportunity to study. Certainly all of us would wish to see an effective effort made to resolve the problem that underlies my hon. Friend's question.

Mr. Alex Salmond: May we debate again next week the issue of the enforcement of the days-at-sea restrictions on the fishing industry? Does the Leader of the House accept that one hour and 11 minutes on Tuesday night was neither the time nor the place in the agenda to deal with an issue as important as the days-at-sea restrictions? Does not the Leader of the House understand that the fishing representatives who attended the debate felt slighted by the truncated way in which the House dealt with an issue which affects the livelihoods of thousands of fishermen and their families in coastal communities around Britain?

Mr. Newton: I note the hon. Gentleman's remarks. There has been substantial debate on this matter in relation to the Sea Fish (Conservation) Act 1992, which underlay the orders debated earlier this week. The fact is that those orders were debated in the normal way for negative orders. I think that that was proper. I noticed that the hon. Gentleman managed to make substantial remarks in the course of the debate.

Mr. Harry Barnes: As the Prime Minister's answer about sub-post offices was substandard, is not it as well that we will have an Opposition debate on this subject next week? Why could we not have a debate in Government time as it is the Government's responsibility?

Mr. Newton: My right hon. Friend the Prime Minister having said what he said, I cannot quite understand the basis on which the hon. Gentleman makes that request. It is open to the Opposition to choose what they want to debate, and they have chosen that subject.

Mr. Brian Wilson: May I endorse the request of my hon. Friend the Member for Falkirk, West (Mr. Canavan) for a debate on Scottish water, preferably prior to conclusions being reached?
May I push the Leader of the House on the Crossrail Bill and point out that if the Bill does not have a Second Reading in Government time very soon it will disappear? If the Government wish to kill the Bill, they should have the guts to do so; they should not allow it to go by default by not giving time for it to be debated. Many firms throughout the country will be given an economic kick-start if this and other major infrastructure projects are given the go-ahead.

Mr. Newton: I note that I now have a fourth Opposition Member to add to the growing list of Members pressing me on that matter. Nevertheless, I cannot be pushed, to use the hon. Gentleman's own word, any further this afternoon.

Mr. Cynog Dafis: Given that environmental sustainability must henceforth be a fundamental principle in all economic policy, and given that Britain is a signatory to the Rio convention and committed to a sustainable development plan for Britain, will the Leader of the House ensure that we have a debate on this subject—which will be of far-reaching importance for economic policies—preferably before July, when I believe that the draft version of the plan will be published?

Mr. Newton: I can do no more, with the greatest good will, than note the hon. Gentleman's request. The Government acknowledge that environmental issues are of considerable importance, even though they can generate a lot of controversy. I will bear in mind the hon. Gentleman's request.

Mr. Keith Hill: Will the Leader of the House add another name to the list of those calling for an early Second Reading debate on the Crossrail Bill? Is he aware that the Government's central London rail study identified crossrail as the most beneficial transport infrastructure project for London and that the private and public sectors are eager to push ahead with the scheme?

Mr. Newton: I will add the hon. Gentleman's name to the growing list. I am less sure about his hon. Friend from Wales, who I thought might want the crossrail across Cardiff bay.

Job Losses

Mr. Rhodri Morgan: On a point of order, Madam Speaker. It concerns the frustration that Welsh hon. Members feel about the constant repetition of the example of Shotton and the loss of jobs in the steelworks there 10 years ago, together with inaccurate employment figures that are given for Shotton. At first, the Secretary of State for Wales—

Madam Speaker: Order. I should be obliged if the hon. Member would come to the point of order for me and not argue his case.

Mr. Morgan: The frustration we feel is that parliamentary convention prevents us from saying that a lie has been perpetrated or that the House has been misled. The problem is that the same theme is being used by the Secretary of State for Wales. He first used it during the coal industry debate, when he said that the Yorkshire and Nottinghamshire coalfields did not have anything to worry about—

Madam Speaker: Order. Will the hon. Member please come to the point of order for me?

Mr. Morgan: I am concerned about the means available to Back Benchers to correct a totally incorrect impression that has been given. When jobs are lost in the shipbuilding industry in east Newcastle it is said, as the Prime Minister said today, that more jobs now exist in Shotton than existed when the steelworks were closed—

Madam Speaker: Order. What is the point of order for me?

Mr. Morgan: In fact, the number of jobs there now is only 45 per cent. Of—

Madam Speaker: Order. The hon. Member is a wily parliamentarian and I know full well that, in raising his point of order with me, he has his tongue in his cheek. I am not prepared to give him advice about procedure across the Floor of the House. He knows full well how to proceed in the matter. If he has a problem, he knows that I am always willing to have a chat with him in my office. My door is always open—most of the time, anyway.

Orders of the Day — Non-Domestic Rating (No. 2) Bill

Considered in Committee; reported, without amendment. Order for Third Reading read.

The Minister for Local Government and Inner Cities (Mr. John Redwood): I beg to move, That the Bill be now read the Third time.
I am grateful to hon. Members for making such rapid progress in Committee with what is an excellent Bill. I am grateful to the Opposition parties, who have appreciated that the relief offered by the measure is greatly sought after by businesses throughout the country and will be welcomed by them.
As we discovered on Second Reading, the Bill offers a further freeze on rate bills for 1993–94 in real terms. It means that businesses are spared increases of 20 per cent. in real terms where they have a new rateable value of £15,000 or more in London or £10,000 or more elsewhere. Businesses with values below those thresholds are spared 15 per cent. increases.
It brings welcome relief to about 470,000 properties in England to the tune of £340 million in 1993–94 and £220 million in 1994–95, on top of the £1,250 million package that' was announced and passed through both Houses last year.
The main beneficiaries will be businesses that have borne the brunt of increases following the 1990 revaluation, with the introduction of the unified business rate. It will include many shops and offices in towns and cities throughout the country, but especially in London and the south-east, where the valuation increases were largest in the valuation based on 1988 values, which turned out to be a high level in the market place. Those businesses can also look forward to the benefits of the new valuation orders on values in 1993, which will come into practice two years later, with parliamentary consent.
The costs of the changes and benefits to business will be met in full out of taxation by the Government making additions to the non-domestic rating pool. Businesses will not experience a change in liability to pay until the commencement date, which we would like to be three weeks after Royal Assent, so giving authorities time to adjust their bills. That is an important reason why I welcome the assistance of the House in making rapid progress with the measure, because it means that businesses are that much nearer to getting the relief that they seek.
The change in liability will have retrospective effect to 1 April, but in the meantime businesses should carry on paying the bills that they have been sent, until the House has completed all stages of the measure and the legislation is brought into effect.
The businesses, as I said, are particularly concentrated in London and the south-east, but there is welcome relief for businesses right across the country which were experiencing quite sharp increases in their valuations as a result of the latest valuation for business premises.
Of the 502,000 properties that will benefit from the measures, about 84,000 are in inner London, 44,000 in outer London, 128,000 in the rest of the south-east, 70,000


in the south-west, 30,000 in the eastern area, 31,000 in the east midlands, 25,000 in the west midlands, 39,000 in Yorkshire and Humberside, 35,000 in the north-west and 14,000 in the north of the country.
As the House can see, the measure has something for businesses all over the country which suffered from the revaluation and will be welcome to them as a result. I have pleasure in commending the Bill to the House and I again express my gratitude for its rapid passage.

Mr. Doug Henderson: I am pleased to say that Opposition Members are continuing to support the Bill. Much was said on Second Reading by my hon. Friends about the need for the measure because of the way in which problems in the economy had made matters more difficult for businesses, particularly small businesses and especially in the south of the country, because they were faced with the largest increases in the business rate.
The need to refer to that on Second Reading was even more evident following visits I paid to areas in the south in recent weeks. I visited places such as Great Yarmouth, Norfolk, Ipswich, Suffolk, Hampshire and Weston-super-Mare. Unfortunately, I did not visit Buckinghamshire. Perhaps I should have done so. The difficulties faced by small businesses became more obvious to me and it was clear that they needed relief from the increases in business rates. The voters in those areas expressed that view firmly last week in the county council elections, where the Conservatives felt the impact in the most damaging way.
On Second Reading we had a thorough exchange of views about the need for the Bill, its content and some of the reservations that hon. Members on both sides had about it.
On Second Reading the House noted that the transitional arrangements for the business rate has applied for two years—for 1990–91 and 1991–92—and that during that period it had been recognised that a further transitional period would be needed to provide additional relief for businesses that had suffered most from the increase in the business rate, which occurred at the same time as the recession. Last year, therefore, the Opposition supported the further transitional arrangements that were made for 1992–93.
The House will have noted that the Opposition supported the transitional arrangements both on Second Reading and in Committee and that we are supporting them again on Third Reading. These arrangements are needed because of the depth and length of the recession. Even if there should be an economic recovery in the next 12 months, further legislation will probably be needed next year and the year after.
A number of worries were voiced on Second Reading and I shall voice them again today. We are worried that the Government will renege on any commitment to maintain, in real terms, expenditure on local authority services that they have identified may be needed in future. The worry is that the Government will be unable to provide local authorities with the resources that they currently receive, which many people believe are already inadequate. As

business rate revenue next year is likely to fall, less money will be available to local authorities, which will lead to difficulties over local authority expenditure.
The Government are struggling to maintain the rate poundage at its present level, partly because of the effects of the recession and the transitional arrangements. Small businesses are worried that the Government may be tempted to renege on the 1988 regulations which kept the increase in rate poundage in line with the rate of inflation.
The transitional arrangements will eventually, of course, come to an end. If they were to come to a sudden end, the consequences for a number of businesses which now enjoy the benefit of this relief could be extremely serious. That worry is not addressed by the Bill. Therefore, the small business community is looking for an assurance that there will be no sudden end to the transitional relief scheme.
People are also becoming increasingly worried about the lack of local democracy. Local people are no longer able to make decisions that affect them; they are unable to determine the kind of services that they want for their community and the way in which those services should be financed. It is not only those who were campaigning in the local elections, or Opposition Members, who say that. Many business leaders are saying it, too, as well as the Institute of Directors and the chambers of commerce. They believe that the determination of the business rate should be left to local communities.
The Government should examine the possibility of giving that responsibility back to local communities. I can give the people of this country a commitment: that the Opposition, when in government, will address that important issue.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. Before the hon. Gentleman says anything else, I remind him that Third Reading speeches are supposed to be about the contents of the Bill. He is going rather wider than the contents of the Bill.

Mr. Henderson: I am grateful to you, Mr. Deputy Speaker. I did not intend to steer myself away from the Bill's contents.
The business community believes that the effects of the Bill will be beneficial. I predict, though, that similar legislation will be needed next year. Additional legislation will also be needed to deal with the revaluation of business properties—effective from 1995, but based on rental values this year. Revaluation will give rise to a number of anomalies with which the House will have to deal at some future date.
Notwithstanding our reservations, some of which I have intentionally expressed and others to which I referred inadvertently, we are happy to give the Bill a Third Reading.

Mr. Eric Pickles: Unfortunately, I was not here for the Second Reading debate, though I read the report of it in Hansard. Nevertheless, I attended diligently throughout the Committee proceedings and enjoyed them enormously.
I support the contents of the Bill, largely because of the effect that it will have on my constituency. which has been hit hard by the recession. It is an area that has traditionally enjoyed high employment and a high level of business


expansion. The shock of the recession had a disproportionate effect on businesses in my community. That is why the Bill is so welcome. Businesses in my constituency are committed to being among the first to come out of the recession.
Business needs a degree of certainty for its expansion plans. The Chancellor's announcement and the contents of the Bill will go a long way towards providing local businesses with the confidence to make an extra effort and thus reduce unemployment.
The Bill builds upon the provisions of the Local Government Finance Act 1988. Its importance is that it limits the rise in business rates to the level of inflation. I moved from an area where rateable values are traditionally low to one where they are traditionally high. I am only too well aware, therefore, of the effects that a move towards full valuation would have on local businesses.
Firms in Brentwood and Ongar need to be encouraged to take on more staff. I am acutely aware of the fact that 3,056 people in my constituency are unemployed. That figure is very small compared with unemployment elsewhere in the country. Nevertheless, it is my responsibility, and that of the House, to encourage local businesses to take on more people. The Bill will, I believe, encourage local firms to do precisely that.
I can foresee clearly what would happen if the Bill were not passed. In the past, business decisions were taken bearing in mind the effects of local taxation. The Bill ensures that business decisions can be taken which ignore the question of local taxation when considering the siting of an office or a factory. I recall a great disparity between offices in one part of the country and identical offices in other parts of the country. Under the old system, businesses were squeezed by local councils until—to use Lord Healey's immortal words—the pips squeaked. The system gave rise to unfair competition and unbalanced markets. Local firms were forced to look round the country for areas that had low levels of taxation. The Bill avoids that situation. It encourages business people to stay in their local communities.
Let me cite a classic case. I recall a firm that had a site in Kensington and Chelsea and a site in Sheffield. In one case the poundage was 1 17p and in the other it was 34'7p. That sort of situation does not encourage business people to stay in their local communities. I know of business men who literally took factory roofs off to avoid paying rates. That kind of activity does not encourage expansion. The Bill is necessary as it ensures that rate levels can be kept down. I have received from the chambers of commerce in Brentwood and Ongar representations to the effect that they are in favour of freezing the level of taxation.
I have much pleasure in recommending the Bill to the House and hope that hon. Members will feel able to support it.

Mr. Nigel Jones: I too welcome the measures, which will provide some help for hard-pressed businesses. I am delighted to hear that 502,000 businesses throughout the country will benefit. I thank my hon. Friend the Member for North Cornwall (Mr. Tyler), whose remarks on Second Reading I read with amusement when I was in Cornwall to fulfil some long-standing

engagements connected with the county council elections. It is clear from the results of last Thursday's elections that my visit was time well spent.
The only question mark over the Bill relates to whether it does enough. In the corresponding debate last year, the Minister said:
I know that the recession has created difficulties for many businesses…The Government have therefore decided that their costs this year should not be worsened…
We propose a one-year freeze to provide a breathing space."—[Official Report, 19 May 1992; Vol. 208, c. 204.] The fact that the Minister is now providing another year's breathing space shows that perhaps not enough was done last year.
Sadly, last year's green shoots of recovery faded away. The Government misjudged the situation then and the result was fatal for many thousands of businesses. This year there are signs that the number of businesses going under is beginning to decrease. I welcome that trend. Again we are hearing of the famous green shoots. During the election campaign someone told me that they were election green shoots. It is rather odd that these shoots always appear in the spring. I hope that this year's are real and that they will grow strong. Only when that happens shall we be able to get Britain back to work. Only then will hon Members be able to start to argue about where best to invest the new money, instead of scrapping about where cuts should be made.
With regard to recovery, the jury is still out. While I was travelling down to Cornwall two weeks ago I heard the financial director of Tarmac interviewed on the "Today" programme early in the morning. Having been asked whether there were any green shoots, he replied:
Yes, but we've seen green shoots every spring for the last four years, and they have all faded away.
On this occasion I am prepared to give the Minister the benefit of the doubt. Good luck to the green shoots and good luck to the many thousands of businesses all over the country which must survive and grow. I must put this question to the Minister: if, in the next few months, there is any sign that the recovery is faltering, will he come back to the House and announce further measures, including further non-domestic rate reductions, to help companies to survive?

Mr. Redwood: I am grateful to the hon. Members who have contributed to this brief debate.
The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) suggested that we shall need further legislation next year. I hope not. The signs of recovery are most encouraging. Business reports from around the country imply that output is rising and that there are opportunities for more business activity. That is what we all wish to see. I remind the House that this measure will continue to provide substantial benefits next year. Taking last year's provision and this year's provision together, the figure is about £355 million. We hope that that will be enough to do the job.
The hon. Member for Newcastle upon Tyne, North asked about real levels of local authority expenditure and business rate pool compensation. As he is aware, this measure provides for full compensation to the pool for the expense of the concessions made. Details of real levels of local government expenditure for next year will be announced at the normal time and in the normal way. Statements regarding the public expenditure figures that


we set out last autumn will give the hon. Gentleman some guidance about Government plans. As he will see there, we are not planning savage cuts in local authority expenditure, as he and some of his hon. Friends like to suggest. There is no intention to renege on the essential 1988 promise that, under the new system, business rates would be allowed to rise only at the rate of inflation. That was the kernel of the new scheme. That was the promise given to and widely welcomed by the business community. It remains the policy of Her Majesty's Government, and it is what the legislation says, with the necessary exception of revaluations—revaluations are always the exception—which have been handled through transitional relief and through this measure.
The hon. Gentleman is aware that transitional schemes have been set out for the most recent revaluation—that of 1988, which came into effect in 1990.I have told the House in the past—I renew the commitment—that, as we know the details of the new valuation based on 1993, and as we think about its introduction for 1995, we shall ask ourselves whether there is any need for a new or further scheme of transitional relief in the event of very large changes which we think would be difficult to implement in one go. I cannot say at the moment. I do not know, and I do not suppose that the hon. Gentleman knows, what changes might occur as a result of that revaluation. We will make our judgment at the time and will put the matter to the House in the usual debate.
I do not know, Mr. Deputy Speaker, whether you will allow me to wander into the area of local democracy, but I should like to say that the retail prices index pledge is important. I am not quite sure how the hon. Gentleman was marrying his wish to sustain the RPI link, which I entirely support, with his wish to give local councils discretion to fix the level of the rate. What discretion

would they be given if the level of the permitted increase were specified in legislation? This is a matter that will need to be clarified in another debate or at another time.
I am grateful to my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles) for his strong support for the measure. He has rightly said that small businesses are crucial in constituencies like his own. Indeed, they are crucial in constituencies up and down the country. It is small businesses above all that will welcome the measure. For a small business man faced with an increase in the valuation of single business premises, the cost increase is very big if the full impact of the change has to be taken. It is very likely that large national businesses with a variety of properties do rather better from the averages, or the swings and roundabouts, of the valuation system.
The hon. Member for Cheltenham (Mr. Jones) criticised me for bringing to the House measures last year and then coming back for a second go in the current year. That is necessary, given the way in which transitional relief and the previous legislation worked. I would have hoped that his party would have welcomed the fact that in his Budget the Chancellor rightly saw that business would appreciate a further year's relief on top of the relief already granted.
Towards the end of his speech the hon. Gentleman was less cynical in his comments on recovery and green shoots. I welcome his desire to see recovery grow and strengthen, as we all do. I believe that the recovery is developing and that the measures will make an important contribution to improving business progress and prosperity over the ensuing year.
Therefore, I hope that we will not need to do the same next year, but I remind the House that the benefits of the legislation will live beyond the current year. That will be more than welcome to the business community.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

Orders of the Day — Reinsurance (Acts of Terrorism) Bill

Order for Second Reading read.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton): I beg to move, That the Bill be now read a Second time.
I regret the need to stand at the Dispatch Box today to introduce a necessary Bill. Were it not for the survival of barbarism in the form of terrorist violence, there would not have been any need for such a Bill. It is a melancholy reflection on life in the latter part of the 20th century that there are still individuals who, in modern democratic societies, being unable to achieve their objectives through the democratic process of the ballot box, are prepared to throw aside the conventions of civilised society and to bomb, maim and kill indiscriminately. One consequence is damage to buildings as well.
The Bill is in response to the spate of terrorist bombings which have occurred recently and which are merely the British facet of an international problem. I was born just after one of the worst wars that the human race has ever suffered, after which we all thought that we would not see such barbarities committed again in Europe in our lifetime. Regrettably, I have grown up against a backdrop of political terrorism in Europe through groupings such as the Baader-Meinhof gang in the 1960s in Germany. On both sides of the House we all deplore and regret that feature of our lives. I am happy that there is a bipartisan or indeed a multipartisan consensus to the extent that we are all united in our desire and, indeed, our determination to prevent such acts of violence from having an impact on our political decisions in so far as those decisions might be thought in any way to involve the bowing of the head or the knee to the achievement of the political objectives of the terrorists who are responsible for so much damage and tragedy.
The Bill is a short enabling measure. I do not propose to speak for very long, but I shall describe the arrangements through which Government reinsurance for acts of terrorism will be provided. I shall also say something about a number of issues which I know concern some hon. Members. A summary of the arrangements was tabled on Tuesday 11 May in response to a question from my hon. Friend the Member for Aylesbury (Mr. Lidington). I hope that that has been for the convenience of the House because, although I say so myself, I doubt that hon. Members will derive much profit simply from reading the text of the Bill. The meat which surrounds the skeleton is the way in which the reinsurance scheme has been constructed. That does not require us to deal with it in statutory form today.
Last November the insurance industry announced that, with effect from 1 January this year, it would cease to renew or to provide new insurance cover on industrial and commercial property which included provision for damage or loss caused by acts of terrorism. That withdrawal of cover was for prudent commercial reasons, following the loss of their own reinsurance protection predominantly from large European reinsurers, against the background of a sharp contraction in reinsurance capacity world wide and worsening claims experience in mainland Great Britain. It is a typical reaction of the international

reinsurance market that during its cyclical reductions in capacity it not only increases prices but declines the least attractive business.
That development was understandably of great concern to British industry and commerce. We received many representations from individuals who were concerned at being unable to insure their property, which meant that they would have to assume the full measure of risk against damage from explosions caused by terrorists. In those circumstances, the Government could not stand idly by and we joined enthusiastically in discussions with the insurance industry and with those who at the end of the day have to pay the bills for the insurance that benefits them. We have put together a scheme which we believe will be effective and which will for ever deny terrorists of all kinds the fruits of their satanic endeavours to bring the country and its commerce to a standstill through explosions, wherever they take place.
The Government concluded that it was necessary to ensure the continued availability of insurance cover for loss and damage arising from acts of terrorism. That cover could continue to be available only if the insurers could be reinsured themselves. On 21 December 1992 the President of the Board of Trade, my right hon. Friend the Member for Henley (Mr. Heseltine), announced that the Government would act as reinsurer of last resort to insurers of industrial and commercial property in Great Britain, with effect from 1 January this year. Since then, the arrangements necessary to give effect to the announcement have been developed to an advanced state. My right hon. Friend laid a minute before the House on 14 January explaining the reasons for entering into a contingent liability ahead of specific legislation.
A number of general principles underlie the Government's intervention. The Government seek to avoid disruption to industry and commerce which might be caused by lack of terrorism cover. The arrangements are to deal with the consequences of a market failure, but they are intended to minimise disruption of the insurance and reinsurance markets. The Government's involvement will last as long as is necessary to remedy that failure, but equally the arrangements are temporary and the Government will withdraw as soon as adequate sources of commercial reinsurance are available once more.
It is important to recognise that the arrangements are not a state aid. Over their lifetime, the arrangements are expected to be at nil cost to the taxpayer. The Government seek not to expose the insurers to undue risks which might threaten their solvency. Clearly, that would benefit no one and could cause a much wider collapse than would occur simply as a result of failure to insure or reinsure commercial and industrial property itself. If the solvency of insurance companies generally were adversely affected, the shock waves would go well beyong the centres of cities and would affect the whole country.
The arrangements are to cover the consequences of a market failure, but our aim is to maintain the insurance and reinsurance markets in effective operation and to fund the scheme ultimately from the premiums charged to those who derive the benefit of insurance and reinsurance for industrial and commercial property which is under threat of damage from terrorist explosions and the like.
The arrangements contain a number of necessary restrictions on the behaviour of the policy holder. Where such measures exist, they are the minimum consistent with the protection of the taxpayer who in a sense is the


ultimate reinsurer. It is in the nature of commercial insurance that sophisticated policy holders will endeavour to be selective about the risks that they transfer to insurers, but the cardinal principle of insurance is the spreading of risk. In conditions of some market failure, risk needs to be widely spread if the interests of the taxpayer are to be protected.
I should make it clear that this is a reinsurance scheme, not compensation. If insurers do not buy the proper insurance cover, the Government will not entertain claims for compensation from them in the event of loss or damage. Although the Government have intervened, the solution that we have put together is fundamentally a market one.
The structure and operation of the arrangements are described in the summary tabled on II May, to which I referred a few moments ago. Briefly, insurers wishing to offer property insurance, including terrorism cover, will become members of a mutual reinsurance company, Pool Reinsurance Company Ltd. That company will reinsure all terrorism risks situated in Great Britain borne by its insurer members and for which an additional insurance premium has been paid by the insured. In turn, the Secretary of State will reinsure Pool Reinsurance Company Ltd.
The company will take an entirely commercial approach to applications for membership. In principle, all insurers operating in the United Kingdom will be eligible for membership, including Lloyds syndicates and overseas insurers. Conversely, membership will not be compulsory if insurers do not wish to join. An important feature for smaller firms is that their basic property damage policy will provide £100,000 of cover for buildings, contents and business interruption automatically and without the need to pay an additional premium. The insured will have the choice of buying extra terrorism cover beyond the £100,000 per section as an addition to their property insurance policy for which an additional premium will be paid.

Mr. Tim Smith: Can my hon. Friend clarify what he means by membership? He said that membership will not be compulsory but voluntary. Is he referring to membership of the company in a technical sense? Who will be the shareholders, and will they be fixed?

Mr. Hamilton: The shareholders of the company will be those insurance companies that are reinsuring through the company. Consequently, membership of the company—as with any company—will be fluid over time as it will be a company limited by guarantee.
The aim of this scheme is for the Government to stand behind the insurance industry that wishes to provide the service of insurance cover for terrorism risks to ordinary members of the public who would otherwise be without the opportunity to take advantage of that service. I shall say a little more about the structure of the company in a moment.
As I said, the insured will have to pay for extra terrorism cover beyond the £100,000 per section. Consequently, we shall reinforce the market, rather than destroy it. That is why our ultimate aim—if that proves possible—is to withdraw again so that there is a reinsurance market capable of taking up the reins without

the need for any Government assistance. Ultimately, we hope that all terrorist groups will draw a conclusion from a quarter of century of failure, in the case of the IRA, to move the British Government an inch towards the realisation of their objectives. I hope that the Bill will receive a warm welcome in such terms that anyone who might seek to change the political system in the United Kingdom by the bomb and the bullet will not derive any superficial advantage.

Mr. Nirj Joseph Deva: The key to the success of the scheme relates to how soon the Government wish to withdraw from it. If the Government want an early withdrawal, higher premiums may have to be paid to get the money back.

Mr. Hamilton: My hon. Friend perhaps misunderstands what I am saying. We do not seek to be involved permanently in the scheme, but I must make it absolutely clear that the Government will stand behind insurance companies for as long as is necessary. We shall not in any way be deflected from the achievement of the purposes which lie behind the Bill by considerations of cost. Clearly, the cost to the taxpayer of the collapse of the commercial economic system of the United Kingdom, without having some mechanism of this sort to preserve stability, would be incalculably greater than whatever sums might have to flow from the taxpayer in the short term to iron out the fluctuations in income and expenditure of Pool Reinsurance Company.
Although we have tried to construct a scheme whereby there is a commercial involvement of the companies that provide insurance cover and of the Government—in certain circumstances we intend to charge a premium for the service that we provide—we hope that, ultimately, there will be no cost to the taxpayer and that the cost to the industry and, indeed, the insured will be a small portion of the total outgoings. The spreading of the risk as widely as possible, as we envisage through the scheme, will mean that a large number of individuals who are paying into the scheme will have to pay a sum which, admittedly, will be more than they have paid in the past. In the past, terrorist cover was thrown in with a policy at no extra charge and no one had to consider the matter because we were never subjected to significant risks.
It is inevitable that costs will be greater than they have been because the cost in the past has been zero to the insured. We hope and expect that such costs will be modest and easily absorbed, especially—to follow the points made by my hon. Friend the Minister for Local Government and Inner Cities in the previous debate—as the economy is beginning to recover and the gross national product will rise with it. That will tend to more than offset any increased costs from the insurance sector. I do not wish to turn this debate in any way into a cause of controversy, so I will not pursue those dangerous lines of argument any further.
To return to the points that I was making earlier about the nature of the scheme that Pool Reinsurance Company will operate and the membership of the company, the insurer will be required as a condition of membership to remit all additional premiums to the company, which will hold and invest those premiums. The company will be reinsured by the Government, who will charge a premium —payment of which will be deferred until such time as the company has built up a stabilising fund of £1 billion. The


premium charged by the Government as reinsurer will normally be 10 per cent. of premiums received by the company, unless what I might call an experience premium equivalent to the claims paid by the Government is greater. The deferred premiums charged on either basis will bear interest until they are paid.
When there are claims, the insurers will bear the first £100,000 under each section of the basic property policy and recover claims beyond that amount from the company. Such claims will be paid out of the premiums received. If those resources are exhausted, the company will raise a levy on its members of up to an equivalent of 10 per cent. of the premiums that they have remitted. If the levy and any investment income is also fully used, the company will claim on its reinsurance contract with the Government. The scheme is simple and can be broken down into segments of insurance, reinsurance and retrocession of the insurance agreement.

Mr. Peter Viggers: My right hon. Friend and other hon. Members will know of my interest in this matter as a member of the council of Lloyd's and an underwriting member of Lloyd's of London. My right hon. Friend explained that the scheme is simple. He has made it clear that the scheme will not apply to Northern Ireland, where there is a different scheme. Can he explain why it is appropriate that there should be a separate scheme for the United Kingdom other than Northern Ireland?

Mr. Hamilton: I shall certainly do that. An interesting fact that I discovered about the situation in Northern Ireland as a result of background work for the Bill is that compensation arrangements have existed there for 300 years to cover the loss and damage caused by what might be called terrorist activity. We did not think it sensible to apply the same kind of scheme in Great Britain, which differs from Northern Ireland in many respects. It is a matter of horses for courses. The Northern Ireland compensation arrangements have worked very well during the current emergency, but we foresee no circumstances in which we would need such a scheme in the rest of the United Kingdom.
The extent to which we shall need to draw on the arrangements laid down in the Bill remains to be seen. We naturally hope that the terrorists will draw the logical inference from our readiness to act and will give up the struggle. I suppose that it is rather too much to expect psychopaths to think in a logical way, but they should be in no doubt that we will not allow the country to grind to a halt as a result of their activities in the city centres or anywhere else.
We shall react accordingly in any circumstances which may arise in the future, but for the time being we think that the scheme for which we now seek statutory authority will be effective in meeting the challenge presented to us in Great Britain. As I have said, we have designed a separate scheme to meet the different circumstances in Northern Ireland, although those circumstances arise from the same cause. Let me add that Northern Ireland will never be detached from the United Kingdom without a democratic vote by the majority there, freely given. The bomb and the bullet will never achieve that objective, certainly so long as the present Government remain in office, and I am sure that I also speak for the Labour party—should it ever be

favoured with the opportunity to govern this country again—when I say that this bipartisan policy will be maintained.
If the Pool Reinsurance Company achieves an underwriting surplus in any year, after deducting the Government premium due for that year, it can distribute 10 per cent. of that surplus to its members in proportion to the premiums that they have remitted.
Clause 1(1) of the Bill empowers the Secretary of State to make payments in fulfilment of the obligations into which he has entered under the agreement to provide reinsurance cover. The clause also empowers the Secretary of State to make payments under guarantees that he may give. It is envisaged that he might wish to give guarantees to lenders, to ensure that the Pool Reinsurance Company could make prompt payment of claims from its members. Entering into the agreement and any guarantees would be subject to Treasury approval.
Clause 1(2) requires the agreement with the Pool Reinsurance Company to be laid before the House after the passing of the Bill, and as soon as it is entered into. Clause 1(3) requires Government premiums from the company to be remitted to the Consolidated Fund. Clause 2(1) defines the reinsurance arrangements to which the Act would apply: they involve risks of damage to property in Great Britain arising from acts of terrorism. Clause 2(2) defines the acts of terrorism concerned, and clause 3 provides that the Act does not extend to Northern Ireland —where, as I have explained, separate arrangements operate.
I want now to comment on a number of matters which have aroused concern in some quarters. Buyers of insurance are naturally anxious to minimise costs. The premium increases appear large in some cases as a proportional increase over the premium charged last year. As I said to my hon. Friend the Member for Brentford and Isleworth (Mr. Deva), however, insurance premiums will still represent a very small proportion of total business costs and will represent good value overall.
Some illustrative examples may be helpful to the House. First. I take the example of a city centre office block insured for £10 million. The extra terrorism premium is typically £8,000 per year, up to a maximum of £12,000. Away from city centres, that would fall to £1,600 per year. By contrast, a typical annual maintenance charge would be £165,000 and the rent on such a block would be up to £2 million a year. In other words, the terrorism premium is equivalent to less than two days' rent.
The logic of that, for those who seek to bring the country to a halt by means of terrorist action, is that although those extra costs are unwelcome and an irritant —at a time of recession any extra cost is unwelcome and could have undesirable effects on employment, disrupt business, and so on—their chances of achieving their objectives in any meaningful way by means of explosions and damage to commercial buildings are so small as to be almost infinitesimal.
Equivalent figures for a £100 million block are a terrorism premium of £50,000, rising possibly to £75,000. On such a block there will typically be a maintenance charge of £1·3 million and an annual rental of up to £19 million. So the extra premiums that I mentioned, even in cases of that kind, are quite modest compared with other costs.
Work has also been undertaken to gauge the point at which increases in insurance premiums would distort


location decisions. It is certainly not the Government's wish to make insurance premiums themselves a cause of businesses moving from one location to another. On the other hand, premiums will also need to follow the normal insurance principle of being related to perceived levels of risk. Premium rates are being reviewed now, and will be reviewed thereafter at least annually. In the present circumstances, the next price movement is almost certain to be upwards, but I would expect the price structure to evolve over time and prices to go down as well as up. Commercial buyers of insurance should bear in mind that —as I believe some already recognise—their premiums were about to rise sharply in any event, following a period in the insurance cycle when many insurers were losing money heavily on commercial lines.
The arrangements envisaged have a number of other advantages. By charging a premium for the reinsurance cover, the Government are both protecting the taxpayer and enabling the business community to carry on as usual despite terrorism. If no premium were charged, the arrangements would be permanent, as no commercial reinsurer could ever compete with reinsurance that was provided free of charge. The arrangements will create headroom which will allow commercial reinsurers to re-enter the market and, over time, allow the Government to withdraw. That is fundamental to our conception of the scheme. By deferring the paying of the premium until a sizeable fund has built up, the price should eventually settle at a lower and more stable level than would be the case if no buffer were ever created.
Furthermore, adapting an insurance solution to what is essentially an insurance problem means that the expertise of the insurance industry can be harnessed in settling claims speedily and fairly both for claimants and for those who bear the costs. If we were to introduce a compensation scheme, there could be greater delays and more inconvenience to those who, following damage and loss, want to get back to business as quickly as possible. In general, the market is likely to be more responsive than Government to spasmodic convulsions of that kind.
A number of groups have come forward seeking relief from the premiums being charged. I know that that worries many hon. Members. Of course, it would be nice to be popular with them by telling the Pool Reinsurance Company to accede to those requests as they arise and to let the taxpayer foot the bill but, as my hon. Friends know, it is no business of the Government to seek to be popular. Consequently, we have designed a scheme which may constitute a hard road, but which we believe in the long-term to be in the best interests of the entire country.

Mr. John Greenway: My hon. Friend advances his argument extremely well. There is a cost that should reasonably fall on commerce and business—as my hon. Friend knows, I have advanced that argument forcefully in recent days—but does my hon. Friend agree that it is also crucial that all businesses should take advantage of the pool reinsurance facility and that the premium charged should not be a disincentive for them to do so?

Mr. Hamilton: I entirely agree with the second of my hon. Friend's two points. The premium charged should not be a disincentive against taking advantage of the

scheme placed before potential insurers. Naturally, I hope that all people who feel themselves to be at risk from such damage or loss will take advantage of the insurance opportunity that exists. It is not the Government's intention to force people to take out insurance. If they choose to assume the risk themselves, that is a commercial decision that they must take.
I shall risk saying that it would certainly be in someone's commercial interests normally to take out such insurance. I am a great believer in insurance, but everyone has to make his own calculations. Clearly, companies expose themselves to significant risk in the event of an explosion. If the premium is modest, it should not prove a disincentive—it would be in people's interests to take advantage of the insurance.
We could make ourselves popular by acceding to the requests that have been made and let the taxpayer foot the bill. The logic of such an approach is that there is such upward pressure on public expenditure for the indefinite future that the same individuals, in their capacity as taxpayers, might find different reasons to place us in an unpopular light at times of greater political sensitivity—for example, when our seats are up for election at the next general election, whenever that may be.
I do not think that there is an easy answer to the problem. Apart from the implications for public expenditure, there is the question of how the insurers can explain special treatment for one group of policy holders to the remainder of their policy holders. There will also be the increased cost of operating a more complex scheme —success for one group is likely to encourage others, which could lead to a further erosion of premium income and the need for more premium increases for those taking advantage of the service. Such narrowness of scope runs counter to the insurance concept of spreading the risk and would also lead to problems of definition and qualification. As Minister with responsibility for deregulation, when designing the scheme I sought to reduce the amount of bureaucratic obfuscation and the cost of administration, and to make the scheme as simple as possible, as widely available as possible and as cheap as possible.
There has been only one amendment to the price tariff since it was introduced—to deal with the problem of blocks of flats. The insurers' original intention was to exclude private policy holders from the scope of their exclusion so that they would continue to receive terrorism cover for no extra charge. Although flat dwellers normally regard themselves as private policy holders, blocks of flats are commonly insured by service companies and property-owning companies, and thus treated as commercial customers. Individual private residents were therefore having an extra terrorism premium passed on to them. After further consideration of the costs and risks, the Pool Reinsurance Company reduced the premiums charged for blocks of flats and the move was announced in a written reply by my right hon. Friend the President of the Board of Trade on 4 March. Blocks of flats with a sum insured value of up to £2·5 millions will be covered by the insurer for no extra premium. Above that level, the premium has been reduced to about one ninth of the rate for industrial and commercial premises in London and one quarter of the rate elsewhere, so no individual policy holder should face a premium increase of more than £10 to £20 for the normal range of property values.
I should like to clear up some confusion about the availability of cover for churches, which are eligible to be covered by the arrangements. It is for the individual church authorities to decide whether to cover specific churches by paying an additional terrorism premium. It so happens that the chief executive of one of the insurers specialising in covering church property is a member of the board of the Pool Reinsurance Company. Therefore, special arrangements were made some time ago to permit another specialist insurer of churches to remit its premiums to the Pool Reinsurance Company.

Mr. David Trimble: The Minister is explaining the distinction between the insurance of commercial operations and the insurance of private operations. What would be the position of those taxi drivers who lost their vehicles through terrorist operations at the time of the Bishopsgate bomb? Are they classified as commercial operators and thus covered by the scheme, or as private ones? I believe that, at the time, they were classified as private and thus not covered by insurance. To take the argument one stage further, what about the private citizen whose car is commandeered in that way? Will he be covered by the scheme?

Mr. Hamilton: The Bill seeks to deal with the problem of insurance cover not being available in the market for damage to commercial buildings. It has never been the case that cover for terrorist risks was not available when cars were damaged—as in the case referred to by the hon. Gentleman. It is not the Government's purpose to prevent the market from providing a solution. If it were proved that such cover was not available, we would be prepared to consider representations on the subject. However, I understand that at present such insurance cover is available and that no one has been refused it. As insurance premium rates have been rising for a variety of reasons, which will be known to the hon. Gentleman, larger amounts of money may be involved. However, the insurance business is a competitive one—a large number of companies provide a variety of products and it should be perfectly possible for individuals who feel that they are at risk to obtain insurance protection against that risk.

Mr. Bernie Grant: Minicab drivers can obtain either comprehensive or third party insurance for their cabs. Drivers with third party insurance are unable to claim compensation from the insurance companies in such cases because third party insurance relates to someone other than the insured. Later in the debate I hope to raise cases which have occurred recently in my constituency. Will the Government consider examining such cases, which involve people's livelihoods?

Mr. Hamilton: The short answer to the hon. Gentleman is that the drivers should buy comprehensive insurance and they would then be covered. It is up to each individual to decide for himself the level of insurance cover that he wants and to bear in mind the risks that he runs by not taking out cover. We all have to take such decisions. I have one car that is insured comprehensively and another car that is covered under third party, fire and theft insurance. I have taken that decision bearing in mind the car's value and whether I would seek to replace it if it were damaged as a result of an accident for which I was responsible. It is up to each individual to determine his requirements.
I hope that I have answered the question posed by the hon. Member for Upper Bann (Mr. Trimble), whose presence today I welcome. Although the Bill relates to Great Britain, the hon. Gentleman's presence turns this into a United Kingdom debate. I always welcome the presence of Northern Ireland Members in debates in the House as it serves as a practical expression of this country's unity. That, in itself, is an act of defiance against the IRA and others who seek to detach the Province from the United Kingdom by their undemocratic methods.
I believe that the Bill and the scheme that we have developed represent a clear and unmistakable signal both to business and to terrorists of all persuasions. To business in London and throughout the country, the Bill is a signal that the Government are determined to ensure that the normal insurance mechanism will continue to work, so that business assets destroyed or damaged for whatever reason can be reconstructed or replaced without delay. To overseas investors in the United Kingdom I say the same. To the terrorists, it is a signal that business and Government together will not permit wanton criminal damage, whatever its cause, to interfere with normal commercial life for a moment longer than is necessary.
I have pleasure in commending the Bill to the House.

Mr. Stuart Bell: I shall pick up where the Minister left off. We fully agree that terrorism cannot impose its will on the British people by acts of violence against property or person. The great tragedy of recent disasters has been the loss of life, for which we grieve and which creates widows or orphans, not a political solution. Unfortunately, that message has not penetrated elsewhere; but one message that can penetrate is that the people of the United Kingdom will not bend the knee or bow the head to terrorism in any guise. The problems of the people of Northern Ireland are, like all other problems, subject to a political solution which, as the Minister said, can come only by the ballot box and by majority vote. We are entirely in agreement with the Government on that.
The Bill must be seen in the context of how insurance markets are coming to terms with many of the disasters that struck at the end of the past decade and which affected the so-called London catastrophe market—to which reinsurers refer as the non-proportional excess of loss market. It has suffered a dramatic shrinkage of capacity —a shrinkage to which the President of the Board of Trade referred when he made his original statement on the Government being the reinsurer of last resort.
This dramatic shrinkage has also affected premium rates. The shrinkage resulted from a series of catastrophes which, with our short memories, we may already have forgotten: the Piper Alpha oil rig explosion of July 1988; hurricane Hugo; the Philips Pasadena refinery explosion; and the San Francisco earthquake. They all had an impact on the reinsurance market and showed how we live in and are part of a global market. They also had an effect on the retrocession market, as it came to be called, and they combined with the losses suffered by Lloyd's of London.
Before 1987, an insured loss of about $1 billion occurred only once every few years; now it occurs each year. The reinsurance market reacted to the events which brought about the general shortage of capacity and led to some reinsurers withdrawing from the scheme at the end of last year.
I welcome the fact that the Bill is retrospective as far back as I January and thus covers the niche left in the market by the withdrawal of those reinsurers. I also echo the Government's hope that, as a result of the mechanisms put in place by the Bill, some confidence will be restored to the reinsurance market. European reinsurers must understand that it is for them to come back into this type of risk, thereby, at first, providing competition for the Government and in the end allowing the Government to withdraw.
I agree with the idea that the Bill is a mechanism designed to help the reinsurance markets of the world, which should be big and confident enough to return to this sector.
On a lighter note, I was struck by the use of the word "retrocessionaire" as a description of the Government's role as a reinsurer of the last resort. I had hoped that hon. Members, having read "The House Magazine"—this week's issue contains an article by me on France—would come flooding into this debate from the bars and corridors of the House. I see the Government Whip shaking his head —he is probably right. Still, the idea of pro and anti-Maastrichteers and marketeers, of Europhobes and Europhiles, coming to the Chamber to debate "retrocessionaire" tickled my fancy.
As for the debate on Maastricht next week, I should like to be here in person to abstain—but I will not be. [Interruption.] I am told that an abstention is the same as a vote one way or the other. The Bill lays down no geographical restrictions on the location of the head office of an applicant, which means that membership of Pool Reinsurance will be open to continental Europeans as well as offshore Europeans.
It pleases the Opposition that the Government are indulging in some intervention. We remain an interventionist party, so when we see the Government intervening we are moderately gratified and encouraged. Often enough, we have sat here and seen the Government, like Pontius Pilate, wash their hands. Sometimes they have wrung their hands like Scrooge; but on this occasion they have taken a firm grip on the problem. They have taken action and in that they have our full support.
The Minister rightly balanced the mechanisms needed in respect of the margin requirements. In the past three or four years, the insurance companies have faced difficulties in this area because of the massive claims made against them. The Minister did not, however, mention article 85 of the treaty of Rome, relating to competition. He may have seen comments in the press to the effect that the Bill may have implications for EC competition law.
The Minister will know that when a number of competing insurance undertakings enter into an agreement under which they will provide cover only through an agreed mechanism, and when this mechanism enables them to defend uniformly higher premiums in such a way as to minimise risk to themselves and to decrease cover for the insured, that arrangement may fall within the scope of article 85.
It can be argued that the Government have laid down what premiums Pool Reinsurance should collect from the insurers. Once the premiums have been set, however, companies may be minimising the risk to themselves and that may give rise to matters that the DTI will have to

work out with the Commission. My view is that, as the reinsurance cover is not available at the moment, this measure acts to increase cover. There are thus difficulties ahead for the Government with the European Commission. As Harry Truman said, perhaps the buck stops here, with the DTI. In this case, I prefer the words of Dean Inge, who once said that, although he had had a great many problems, most of them had never happened. I hope that the same will apply to article 85.
I am convinced that the Commission will not want to intervene to prevent the Bill from being fully operative or to prevent the gap in the reinsurance market from being closed. There is another difficulty for the Government, who are setting the premiums for the insurance companies through Pool Reinsurance. The hon. Member for Brentford and Isleworth (Mr. Deva), who has left the Chamber, asked the Minister about that. [Interruption.] I am sorry. For those who read Hansard assiduously, let me make it clear that the hon. Gentleman is still in the Chamber. He asked the Minister about the impact of premiums. The danger for the Government would be if they set the premiums so high that the pool did not grow sufficiently to fulfil the purpose for which it was created. However, if the Government set premiums high, that would encourage competition from other reinsurers and bring them back into the market place.

Mr. Tim Smith: The hon. Gentleman said that the Bill was retrospective to 1 January. That is my understanding, but I can see no reference anywhere in the Bill to 1 January, or indeed to any commencement date. In those circumstances, my understanding is that the Bill commences when it receives Royal Assent and not before.

Mr. Bell: I am grateful to the hon. Gentleman for bringing that to my attention. However, all the guidelines that I have received from the Department of Trade and Industry say that the Government's intention is that the Bill, when enacted, should be retrospective to 1 January. That will cover the niche in the market place caused when the reinsurers withdrew their cover at the end of last year. That is my understanding and I hope that the Minister will confirm it.
As far as I can tell from the Bill, the Minister has eschewed a policy of a compulsory levy on companies in designated areas. Having listened to the Minister with care, I would subscribe to that view. It is a matter for those involved to take out insurance as and when they wish, and how they wish. I am glad that my hon. Friend the Member for Tottenham (Mr. Grant) is in the Chamber. No doubt he will elaborate on that from the point of view of his constituents if he catches your eye, Mr. Deputy Speaker.
It is right and proper that the Government should not, through their ultimate reinsurance cover, pick up the tab for looting, about which we have read a great deal in the newspapers. The Labour party has always believed, and still believes, in value for money. We have no intention of disbursing taxpayers' money gratuitously or abundantly in such a situation. What is remarkable is the number of people who come forward with a claim on insurance, and certainly on Government insurance, if they feel that they can. However, compensation for looting should be covered by general insurance policies. I am sure that, if those involved were to make a proper claim to their insurance companies, they would find that that was the case.
The Bill covers both damaged property and consequential losses arising from the interruption of business, so is not limited simply to the former. I agree with the Government on the point raised in the other place on 15 February this year, through a written question at column 62. The question was whether that cover would include premises closed as a result of the threat of terrorism.

Mr. John Bowis: I seek clarification—perhaps from the hon. Gentleman, perhaps from the Minister—about compensation for looting. Looting is a risk that is not due to terrorism. If the building were left open, a claim for compensation for looting might be subject to question. If it were left open as a result of terrorist action, might not terrorist action be joined to the insurer's defence when resisting any such claim? There may be more complications here than meet the eye.

Mr. Bell: I am grateful to the hon. Gentleman. I had anticipated that point. One of the great things about speaking from the Dispatch Box is that one can sometimes anticipate interventions. The answer is that, in law, the claim would lie against the security firm rather than the insurance company. Victims of looting can make claims, but compensation does not necessarily lie through the route of the insurance policy.
I agree with the Government's view about the vacating of premises under threat, as expressed in the other place. They are also right to have the insured deal only with the insurers and to keep themselves at arm's length. That is sensible.
The scheme has the merit of keeping the Government's commitment to the minimum required by reinsurance. It places the burdens upon the insurance companies, when working out policies for commercial and industrial companies, and enables them to add on to the premium cover specific loss arising out of terrorist action. The Minister was right to say that that has been part of general insurance policies in the past. It will now be an add-on —to use a computing term—and provide for an additional 10 per cent. from insurance companies that are members of Pool Re and also for the realisation of investment income before there is a charge on the Exchequer.
The balance of the scheme is such that it should encourage other reinsurers to come into the field. It permits the insurance world to show the flexibility that is required in a fast-moving world with a fast-moving insurance market. It also gives the insurance world an opportunity to assist those in the community. One of the themes that the Opposition are developing is the role of insurance companies within the framework of the community. Rather than withdrawing from the community by withdrawing cover for such claims, the insurance world will come back into the community, with the Government as last-resort insurers. That means that business will be as usual in the complex world in which we live.
I would not wish to bore the House too much with technical detail, but I noticed the convoluted manner in which the total premium to be paid to the Government as the reinsurer of last resort will be calculated. It is a relief that the Government would not normally be entitled to require Pool Re to make premium payments unless the surplus in Pool Re exceeds £1,000 million, and that the

sum paid at any time will be limited so that the surplus remaining in the fund will not be reduced to below £1,000 million.
I have seen a number of pessimistic forecasts in the press as to how much premium income the pool is likely to attract, but I am confident that the framework and the guidelines of the scheme will rectify a weakness that has developed in the reinsurance market, caused, as I have said, by a shortfall in capacity. This modest Bill involves the Treasury in modest terms and will show our determination that it will be business as usual for the City of London, as it will be elsewhere.
I shall end my remarks where I began. The Minister said that there is an infinitesimal likelihood that terrorist attacks will succeed. The Opposition say that there is a non-existent prospect that they will succeed. The message we give to the terrorists is the message with which we began—death and destruction may follow from their actions, but political decisions will not.

Sir John Wheeler: I am glad to follow the hon. Member for Middlesbrough (Mr. Bell), and to support what he has said. It is a particular pleasure that the House should be attended by hon. Members from all the component parts of the United Kingdom—Northern Ireland, Scotland, England and Wales. It is also a pleasure that the House is in whole-hearted agreement on the necessity for the measure, for the reasons given so eloquently by the hon. Gentleman.
The Bill is, in one sense, interventionist, but it comes from a Government who are pragmatic in the way that they administer the governance of the United Kingdom. The principal reason for the Bill is to underline our determination that illegal acts of terrorism shall not be the means by which political changes occur. It is important that the House is united in that endeavour, since that will lead inevitably to the defeat of terrorism in the United Kingdom.
I am also glad to welcome the speech of my hon. Friend the Minister and to comment upon some of its aspects. First, however, I shall refer to the report of the commissioner of police for the City of London, published a few days ago, which makes it clear that, despite the incidence of terrorist attacks in the City—St. Mary Axe in 1992 and, sadly, more recently the Bishopsgate bomb—the fact of the matter is that the City of London police force has achieved what few police forces in the United Kingdom have so far achieved, in that its overall recorded crime figures show a decrease of 10·6 per cent., which, as the report says,
is very much against the national trend and a greater decrease than any other Force in the country, many of which are in fact showing an increase.
The report says that the City of London, despite those isolated and horrific bomb incidents,
is still a relatively safe and civilised area in which to live, visit or do business. It is important to keep that perspective as, given the hundreds of thousands of people who frequent the City daily, the statistical chance of being harmed by criminal or terrorist activity is still extremely low.
We should bear that point in mind.
I take this opportunity to commend the City of London police, a small but special police force that has rendered exceptional service under difficult circumstances and has built up a remarkable expertise in dealing with the problem of terrorism. For example, although the St. Mary Axe


bomb blew the bomb car to smithereens, the City of London police scene of crime officers managed to scour through every fragment to discover sufficient evidence to identify the vehicle, which in turn led them to a suspect, and an arrest and charge have been made. Terrorism can be defeated, and one of the purposes of the Bill is to emphasise our support for the police service in that determination.
During the recent outrages, both in 1992 and this year, the citizens of the City of London, in common with the whole country, I believe, have greatly admired the leadership of both the previous and the present lord mayors of the City of London, and the determination of the corporation as a whole to rally and organise the commercial community so that the people who commit terrorist outrages do not succeed in their primary endeavour.
The proposals before us are necessary and welcome. I know that the Association of British Insurers was greatly concerned about the difficulties that it faced, to which my hon. Friend the Minister rightly referred. The mechanism that we propose to put in place will be both fair to the taxpayer and reasonable in its objective.
I thank my right hon. Friend the President of the Board of Trade for the way in which he has responded to my concerns on behalf of my constituents in the city of Westminster who live in expensive blocks of flats which, as the Minister has explained, would have been treated as commercial properties, on which there would have been an especially high premium to pay. Many elderly people and people on lower than average incomes would have found the additional premiums hard to bear, and it was important that they should not become the victims of terrorist outrages by virtue of a substantial increase in their insurance premiums.
I am grateful to my right hon. Friend for his practical and sensible response to that problem. As my hon. Friend the Minister has explained, for many people living in blocks of flats in my constituency, the additional premium, on a flat rate basis, may be no more than about £14. That is indeed bearable and, on behalf of my constituents, I am glad to thank the Government.
As for the commencement of the Bill, it is right on this exceptional occasion that the House should depart from its regular objection to retrospective legislation and ensure that the measure be made effective from 1 January this year. We breach no precedent in doing that; this is an exceptional measure to deal with a particular situation, and it is right that we should allow an element of retrospective legislation.
The Prime Minister responded to a question that I asked him after the Bishopsgate bomb by saying that the House would have such a measure before it at the earliest opportunity. My right hon. Friend has honoured that pledge in bringing the Bill before the House, and it is a matter for great satisfaction to us all that both sides of the House should be united in the endeavour to take the Bill speedily on to the statute book in the interests of defeating terrorism and supporting the British people.

Mr. Malcolm Bruce: I am certainly glad to add my voice and that of the Liberal Democrats to welcome the proposals, especially as they end a degree of uncertainty that needed to be resolved in a constructive fashion. As a Member who represents a Scottish constituency and who believes that the United Kingdom needs some fundamental political changes, I must also say that such changes must be brought about by the democratic process.
There is no doubt that such a measure was essential, because there was a danger that the terrorists might have been given another target, in the sense of being able not only to maim and injure people but to seek to bring down corporations, too, and thus to create more economic disruption than the mere disruption of offices that results from the damage that they inflict.
The Government were right to seek a balance. We could not have witnessed too prolonged an exchange in which the Government were saying, fundamentally, that it was the responsibility of the insurance industry to take the risks, and the insurance industry was saying that it would withdraw altogether from that risk area. That gap could not have been allowed to continue for long, and we welcome the fact that the Government have understood that, and have introduced a scheme that seeks, in a sense, to go back into partnership with the industry and to ensure that the industry and the ultimate buyer of insurance make their contribution in terms that appear fair, balanced and reasonable.
There are people far better equipped than Ito rake over the details and raise concerns and anomalies. The Minister said that the measure had been carefully thought through, but that the Government were willing to consider any representations that might be made. In view of the spirit in which the Bill has been introduced, I am sure that any such representations will be welcomed and accepted constructively.
There is justice in what the Government are trying to do. I cannot calculate exactly whether they have got the balance completely right, but the thrust is certainly right. Making the Government the insurer, or reinsurer, of last resort is the right approach, rather than providing blank-cheque compensation. The Minister made it clear that the virtue of that approach was that it retained the inherent merits of continuing to operate a proper insurance scheme that will probably function on normal commercial lines, with the consequent speed of response. Clearly that was necessary, and one hopes that it will eliminate wrangling.
I welcome the fact that the Minister made it clear that, while the objective of the Government's scheme is ultimately to achieve no cost, the guarantee is absolute, and the objective of no cost will not lead to any possibility of their failing to honour their reinsurance obligations. That is absolutely crucial, because the Government are the last resort, and if those obligations are not honoured there is nowhere else to turn.
The hon. Member for Upper Bann (Mr. Trimble) mentioned taxi drivers, and the Minister responded robustly and in a constructive way. Although the hon. Member will pursue his case, and I encourage him to do so and hope that he will secure a sympathetic response, it is very important that it is understood that, when this Bill becomes law, nobody is absolved of the obligation to make


the calculation of insuring or not. It must be made very clear to people that, while it is regrettable that the climate in which we live has increased the costs that we have to bear, that calculation must be made. One cannot be foolhardy and try to cut corners, consequently leaving oneself exposed.
Nobody can be in any doubt that anybody who fails to take that necessary step will not be entitled to seek compensation from outside. It is important, and I am sure that the Government will make it clear, that that is fully understood as widely as possible.
The different scheme in Northern Ireland may be interesting as a comparison, because it is troubles arising from Northern Ireland that have made this scheme necessary. It unites all Members in the commitment to ensure that neither by commercial nor by physically violent means can terrorism prevail. I believe that some practical common sense and ingenuity has been shown here, and that the insurance industry has responded.
I spent a day at Lloyd's a few weeks ago, when I was made very well aware of the concern there about the fact that 3,000 people have effectively been ruined by that operation, and that many jobs will now be lost. It was made clear to me that, in addition to the large risks which the hon. Member for Middlesbrough (Mr. Bell) has already identified, the consequences of climatic change have had a serious effect upon Lloyd's, because it has led to a number of violent wind storms, for which Lloyd's was the reinsurer.
It may well be that, in its heyday, Lloyd's could have taken up the risk with which the Government are now faced. However, in the circumstances in which it is now placed, it would be very foolhardy indeed to add that risk to those from which it is still trying to recover.
I therefore welcome the fact that, after what might be described as initial spats—perhaps understandable and justifiable—between the Government and the insurance industry, the position taken by the Department of Trade and Industry in this Bill has prevailed, uncertainty and anxiety have been laid to rest, and a properly orchestrated scheme on a proper insurance basis will now be put in place to fill the gap from the day the insurance company withdrew the original cover.
I hope that the Bill can make speedy progress and that it will be noted outside the House that it had total all-party, all-Member support.

Mr. John Greenway: I begin by declaring some interest as having been involved in insurance for 20 years, as an adviser to the Institute of Insurance Brokers and as an elected member of the Insurance Brokers Registration Council. Perhaps more important on this issue, although it is not an interest to declare, we have an all-party insurance financial services group, which I chair and which has been very active in discussing with the Government and the industry how to deal with this dreadful problem of terrorism cover.
I pay a tribute to my hon. Friend, the Under-Secretary of State and to my right hon. Friend the President of the Board of Trade. They will know how difficult it has been for all of us, given the sensitivity of this issue, to discuss—I think that this will be taken in the right way—how to bring pressure to bear on the Government to recognise that something needed to be done. It was very late in

December before we finally reached agreement on how to proceed, but the reception that our approach received was not just extremely courteous, but very understanding. The fact that this Bill and the scheme that it underwrites so closely reflect the general principles that we put to my hon. Friend and his colleagues and officials at the DTI clearly indicates that they listened very carefully to the representations of the industry.
I have said that I am a member of the Insurance Brokers Registration Council. Our office has been affected by both bombs. I was in Bishopsgate last week and I have seen the devastation caused by the second explosion. It left me with very mixed feelings. Above all, it strengthened my belief that, when we stand up in the House and say that terrorism will not prevail, that the bullet and bomb will not change the course of British politics or politics in Northern Ireland, it is not just because that has to be the way, but also because it is an absolute outrage that such acts should be perpetrated. I was moved by the way in which the people who work in the City, the police and the contractors putting right the damage carried on. They deserve the highest possible praise and support.
We have all said, in the wake of these two outrages in the City of London and others elsewhere throughout the United Kingdom, that the terrorists will not win; life goes on. This measure is designed to ensure that life can go on, that businesses can be up and running as quickly as is humanly possible.
In the discussion that we have had already, some concern has been expressed about whether the Bill as drafted can be retrospective to 1 January. I am in no doubt about that. As I understand it—perhaps my hon. Friend will confirm this in winding up—the Bill gives Parliament's approval to the Treasury paying out of public funds the money needed to underwrite Pool Re: in effect, to pay out money to support any agreement entered into by the President of the Board of Trade. He made that agreement at the end of last year, so what we are doing here is providing the funding for the agreement that he has already freely entered into.
Again, I pay a tribute to the Government for the way in which they so quickly made clear after the recent outrage in Bishopsgate that moneys would be forthcoming and that there would be no difficulty with this scheme because we had not yet passed the Bill through Parliament.
In his introductory speech, my hon. Friend talked about all those who consider themselves to be at risk and said that it was in their commercial interest to insure. I suggest that we should go further. I believe that we should discourage selection on the basis of whether people ought to have terrorist cover. It is a simplistic argument, but one does not say to one's insurance company that flood damage should be excluded because the house is on the top of a hill.
The whole principle of insurance is one of mutual cover, mutual risk and mutual funding. What we have seen in the past year or so must tell us all that no one can be sure where terrorists will choose to strike. Yes, there are some potential targets—we all acknowledge that—but I feel strongly that it is the duty of the House to discourage selection. I take my hon. Friend the Minister's point that there should not be compulsion, but I think that we should encourage businesses to avail themselves of the Pool Re facility. The Minister gave a vivid example of the fact that,


in the full context of the overall picture of business costs, the costs of taking advantage of Pool Re in extra premium terms are very small.
There are two principles that business men ought to acknowledge: first, that it can happen to them, and, secondly, that, if it does, it will not affect their ability or the resolve of their businesses to continue. That means that every business needs a strategy for management of the risk that terrorism represents. That strategy embraces three elements. First, it must mean increased vigilance. My right hon. Friend the Member for Westminster, North (Sir J. Wheeler) rightly paid tribute to the work of the police in the City of London. Indeed, the police throughout London have done a tremendous job in the face of terrorist activities and we ought not to forget that many potential bomb threats have been intercepted with tremendous skill and with the use of intelligence. We need to get across the question of vigilance to the public and to the business community. I do not want to dwell on that point today because I know that my right hon. and learned Friend the Home Secretary has made it clear that everything that can be done will be done in that regard.
Secondly, businesses must have an emergency plan. After the St. Mary Axe bomb, everybody was overwhelmed with admiration for the speed with which Commercial Union, the worst affected by the bomb, was able to respond. There has been no real impact on its business because it had an emergency plan ready to put into operation. Following that, many other businesses in the City of London did the same and those plans were put into effect speedily and with tremendous skill during the recent outrage in Bishopsgate. That is a lesson that businesses throughout the country need to take on board.
Thirdly, the element in the strategy on which I place the greatest reliance is the need for insurance. The Bill makes that possible. It is largely an enabling Bill and there is much detail still to be thrashed out. I know that the Department of Trade and Industry is approaching the Bill in a constructive way. I am sure that my hon. Friend the Minister acknowledges that if there are still some issues to rehearse in detail—issues that might have been rehearsed during the Committee stage of a similar Bill—such rehearsal would not be appropriate tonight. There will be an opportunity to raise concerns directly with him and his officials will be available at a later stage.
Will my hon. Friend think again about the need for a separate certificate of insurance for terrorism? I should have preferred us to deal with the issue in the following way. Everyone has made it clear that unless one takes advantage of the Pool Re facility or makes some other arrangement, one will not be insured. It is clear to the policyholder on the renewal documents, which have been sent out by insurance companies since the end of last year, that the £100,000 limit per item of claim is clear and that everything else is excluded. For that reason, we can perhaps avoid the need for a separate certificate of insurance for terrorism when people buy cover in future.
I was also encouraged by what my hon. Friend the Minister said about the need to contain bureaucracy and to make the scheme as simple as possible. There is a problem about the degree of information that has to be

provided to obtain quotations. However, I welcome the fact that the Department has agreed to review its requirements in that area.
Commission is another relevant point. When we put the scheme together and asked the Government to be reinsurers of last resort, I argued strongly that there should not be a commission element on the extra payment into the pool. With hindsight, I think that that was a mistake. I believe that there should be some element of commission for two reasons. First, it is important that businesses take up the cover, so we need to have some incentive. Secondly, brokers may try to seek alternative markets for cover which pay commission and that would undermine the viability of the Pool Re scheme. I shall come to the point about alternatives in a moment. There is a significant work load in relation to the scheme itself and in relation to claims. I believe, therefore, that we should re-examine the commission argument.
Other reinsurance schemes are being considered. The hon. Member for Middlesbrough (Mr. Bell) raised the point about potential problems with the EC over competition policy. We have agreed that there should not be compulsion. No one suggests that every business man is being compelled to insure through the scheme. Alternatives will be provided—indeed, I understand that that is happening already. For that reason, I encourage everyone to take advantage of Pool Re.
Over three to five years, there is no reason why the scheme should not be in equilibrium in terms of funding and there is no reason why the objective that we all sought to achieve at the beginning of the exercise—that there should be no ultimate cost to the taxpayer—should not be achieved.
I give a warm welcome to the Bill. I again thank my hon. Friend the Minister for his work so far and for the work that he will continue to do on this important matter.

Mr. Bernie Grant: I, too, welcome the opportunity to raise matters pertaining to insurance in this debate. It is clear from the number of hon. Members who have remained to take part in the debate that the subject is serious, especially because the problems of Northern Ireland are now transferring to the mainland. Many people are extremely concerned about what is happening. I have no time for terrorism, as I have stated in the past. What is happening will cause severe grief unless serious action is taken to try to resolve the situation in Northern Ireland. However, I am here to speak not about the position in Northern Ireland, but about insurance claims.
In the past year in my constituency and in my area, we have had several problems with terrorism. A bomb was left at White Hart Lane station in my constituency and a bomb went off in Wood Green shopping city in my area. Garages in Muswell Hill have been raided and explosives have been found. So the situation is serious and I for one am angry that the IRA should seek to use terrorist methods at all, but certainly not in working-class areas where the people are poor and must struggle to make a living. It is particularly in this regard that I wish to look at the question of insurance.
I welcome the Bill and I support what my hon. Friend the Member for Middlesbrough (Mr. Bell) said. I was interested in his point about the Government's intervention in this specific area. I, too, am pleased that they are


intervening. It is not usual for this Government to intervene—they talk about market forces taking care of everything—yet here we see them directly intervening. I believe that one of the reasons for their intervention is their moral obligation to look after the security of everyone —big business, my constituents and everyone else. So they feel that they must do something to protect people's security.
The Government must protect not only the interests and property of rich people in the City, but the interests and property of people in my area, working-class people. It is in this regard that I mention two of my constituents who were the minicab drivers involved in incidents on the same night as the NatWest tower and other buildings in the City were blown up.
One of my constituents was approached by two men, one of whom held a gun to his head. The second man got into the seat beside him and they ordered him to drive towards various destinations. The driver of one of the minicabs told me that the person sitting next to him was priming the bomb, putting the wires together, setting the timer and so on, right next to him in the same vehicle. After they had been going some time, they placed the bomb, now live, underneath his seat and, with a gun to his head, told him to drive to 10 Downing street. They took away the wing mirrors and inside rear mirror and told him that they would be driving behind him and that if he tried to stop or leave the vehicle they would shoot him. Then they got out.
My constituent then set off for Downing street, but after he had gone about 50 yards he stopped his cab, got out of it, hailed a bus driver who was passing and, with his help, contacted the police. He himself stood in the road, waved people down, told them that there was a bomb in the car and stopped other people being injured. After some time the police came, the place was cordoned off and the car blew up. Roughly the same thing happened to my second constituent whose car stopped somewhere in the King's Cross area.
I mention these points because this was not just a case of people abandoning their cars and running for their lives. The two people concerned acted in a very public-spirited manner and saved not only their own lives but the lives of others in the vicinity. In doing so they were able to prevent any destruction of property as well as of lives.
Since the incident my constituents have experienced a number of problems. First, they are unable to claim compensation. This is where we come to the question of the insurance. I understand that, for various reasons, these drivers took out a hire and reward insurance third party only, which means that if they have an accident and the other party suffers damage they are covered for that, but their own vehicles are not insured and they get no compensation from the insurance company for them.
That is what concerns me because, while the Minister may say that they have the option of going for comprehensive insurance, which would have given them compensation, the fact is that when my constituents look out insurance they did not expect that the IRA would hold a gun to their heads, put bombs in their cars and blow them to bits. It is not, therefore, a normal, everyday risk, and that is my argument. They acted properly in getting third party insurance as required by law. They had no idea that they would be in this situation. It is not an everyday occurrence. It may be that in Northern Ireland, where such things happen fairly regularly, minicab drivers will accept

the possibility of being forced to take on board a terrorist bomb and will see the need to insure against it specifically. But here on the mainland it is not a regular occurrence, so we cannot expect drivers to take on such liabilities. Now that it has happened on at least three occasions, minicab drivers will be well advised in future to take out comprehensive insurance, but at the moment, because such things have seldom happened, they feel it unnecessary to take out the full insurance.
On that basis, I appeal to the Minister to find some way of getting compensation for these drivers. They are self-employed people whose livelihood has been totally destroyed, and because they cannot claim compensation they cannot work.
I asked the Library to give me some advice on compensation. I was told that if the drivers' cars had been burnt during a riot or looting or something like that, under the Riot Act they would have been compensated. If a person's car is set on fire by a bunch of football hooligans, for example, he can get compensation from the police, but if it is blown up by the IRA and set on fire he cannot claim compensation.

Mr. Neil Hamilton: The hon. Gentleman has answered his own point. The purpose of the Bill is not to provide compensation but merely to provide at a commercial premium rate an insurance service which otherwise would not be available. Similarly, in the case of damage to real property, in circumstances where an insured had not taken out an insurance policy covering it for the particular kind of damage which was suffered, the provisions of the Bill would not provide retrospectively compensation to pay for the damage suffered. So we are not treating the owners of commercial real property in any way differently from the owners of motor cars, as in the case that the hon. Gentleman has brought before the House this afternoon. We are seeking to plug a gap in the market, although the Bill will apply to contracts of insurance entered into as from 1 January. We are not bringing in a compensation scheme.

Mr. Grant: I thank the Minister for that. I understand and support what the Bill is doing. What I am demonstrating to the Minister is that there is a loophole in insurance law generally. I do not say that an amendment could not be tabled—I do not know how things are done —but, although I support the Bill, I am suggesting that this is something else to be looked at. Not only have problems arisen about compensation and loss of livelihood, but the men concerned have been offered no protection. One suspected person has been identified and arrested and, at some stage, my constituents will be called on to give evidence against the people concerned, but no protection has been provided for them.
Those men are totally traumatised, but have had no counselling. One of my constituents is a refugee from Ethiopia. He told me yesterday that he had run away from a traumatic situation there only to arrive in Britain and find himself in another traumatic situation. Perhaps it was because of his experience of dangerous situations in Ethiopia that he was able to act in a public-spirited manner and prevent a further tragedy.
The hon. Member for Ryedale (Mr. Greenway), who spoke for the insurance groups, rightly talked about how brave the City workers were to go back to work and about the good work of the fire brigade and the police. I agree


with him, but my constituents have also had a very traumatic experience. No one has said that they are brave. No one has been to see them; the Prime Minister has not written to them to thank them for not delivering the bombs that they were ordered to deliver. When we give praise to people like the workers who turned up for work the next day, I hope that the people in high positions will also think about my constituents who also had a very traumatic experience.
I hope that there are no more incidents, but, being pragmatic and the situation being what it is, I suspect that there might be. I would like the Government to consider whether there is a way in which my constituents, who have only third party insurance, can be helped. People in my constituency are working for £80 per week; they have to struggle to pay the insurance premium before they can go out and earn their living. I am not talking about people who have a lot of money and can afford to pay £2,000 for comprehensive insurance. One of the cars which was blown up was worth only £1,500, so paying £2,000 for comprehensive insurance is just not worth it. I would be very pleased if some arrangement could be made whereby the Government make an ex gratia payment in recognition of my constituents' actions.
The owners of the minicab firm—Alan's Minicab Services—have set up a trust fund for the people concerned because they, other minicab drivers and the local people feel that something should be done for them. I hope that the Government can find a way in which to ensure that people who are caught, by poverty, with third party insurance obtain some compensation or relief from the problems that they have been forced into facing.

Mr. Tim Smith: I am sure that the whole House will have considerable sympathy for the two constituents of the hon. Member for Tottenham (Mr. Grant), both of whom acted in a completely publicly spirited manner.
I congratulate my right hon. Friend the President of the Board of Trade and my hon. Friend the Minister on introducing the Bill. Towards the end of last year they responded very quickly to the situation that arose, when it became clear that there would be no possibility of reinsurance in the market. I know that the way in which they responded to events in the market has been widely welcomed by insurance companies and insurance brokers. I am an adviser to the British Investment and Insurance Brokers Association and I can tell the House that it, too, welcomes the Bill.
We are all very conscious of the background against which the Bill is introduced. I reiterate what every hon. Member has already said—that a measure of this kind is essential if we are to demonstrate to the IRA our determination that they will not win under any circumstances.
I shall ask my hon. Friend the Minister one or two questions about the Bill. In some respects, the Bill could be described, I think he might agree, as a bit of a blank cheque. It does not have a date on it and I would like a date to be inserted, even if the agreement has the date 1 January 1993, which I understand to be the case.
When my hon. Friend responds to the debate, will he give some information about how he will report on financial progress? If we give the Government a blank cheque in this respect, we will need regular information about how the scheme is progressing. My hon. Friend described the Bill as a market solution. I welcome the fact that it is as near to a market solution as we can achieve, given that it involves Government intervention, as has been recognised. I believe that Government intervention is justified where there is market failure, as in this case, and I commend my hon. Friend's scheme. I take my hon. Friend's point that, in the long run, there will be no cost to the taxpayer. That is what we hope and believe.
It is just not the case that it is a market solution, with low costs and, in the end, no cost to the taxpayer. There may be considerable costs to the taxpayer in the interim period because of cash flow disadvantages. The Government may sometimes have to pay out large sums of money and be unable to recover them until some subsequent, unspecified time.
For that reason, it would be helpful if we could hear a little more about the arrangements for reporting on what happens to Pool Re, which is a company limited by guarantee, as my hon. Friend the Minister explained. Presumably, like any other limited liability company, it will, in due course, file accounts at Companies House. We will then be able to judge the position of the company, some months after the end of its financial year. Does my hon. Friend have other proposals in mind for reporting on how things go?
Perhaps my hon. Friend can tell us how things have gone so far, because we are now in month five of the new arrangement. It would be helpful to know about the extent to which, to date, people have participated in the new arrangement and the amounts of premiums that have been paid into the company. It would also be helpful to know whether my hon. Friend believes that it may be necessary to pay any claims arising from the Bishopsgate bomb.
Those factors are important when one reads the financial memorandum, which states—I understand why it could say nothing else—that "no precise estimate is possible" of the cost to the Government of the arrangements envisaged. Although my hon. Friend has said that the costs to the taxpayer will be low and that, in the end, the taxpayer will not lose out, I should like to hear about the arrangements for reporting on progress.
I reaffirm my support for the Bill, which has the universal support of the House. In the circumstances, the Bill is essential and I wish my hon. Friend every success in implementing it.

Mr. David Trimble: In common with every hon. Member who has spoken in the debate, I support the Bill. Although it is not the right measure to deal with the issue, I accept that it is necessary that something should be done. The Bill and the scheme that it underwrites at least have the merit of being put into operation speedily. In an ideal world, however, I would suggest that the Government should adopt a different scheme.
The event that finally galvanised the Government into acting on the problem was the bombing last year of the Baltic Exchange. The subsequent events were not surprising, but at the time of the bomb, what struck those


of us who represent Northern Ireland were the incredible estimates of loss that were produced. People immediately produced estimates of £700 million and more. At that time last year the total bill for all the bombing incidents in Northern Ireland over 20 years, in terms of criminal damage payments, was significantly less than that. I do not have the precise figures with me, but I think £400 million to £500 million would be on the high side. Yet so-called insurance experts produced such incredible figures.
As Mr. McKittrick, The Independent correspondent, rightly said recently in a newspaper article, after the Baltic Exchange bomb the Republican leadership was "surprised and delighted" at what was said—surprised because, evidently, it did not expect the bill for damage to be so high, and delighted at the panic-stricken reaction. It was inevitable, in the light of that, that there would be more bombs in London. It is further inevitable following the reaction after Bishopsgate, for we saw the same degree of exaggeration. That applied to reaction in terms of estimates, with people talking straightaway about a bill of £1 billion, and making exaggerated comments about the scale of the damage.
I wish London journalists would learn to tell the difference between structural and superficial damage. There was serious structural damage to the church outside which the bomb was placed, but it was obvious to anybody looking at the huge photographs in the newspapers, which occupied far too much space, that the damage to the office blocks was entirely superficial. I was in London on that Saturday morning. I was travelling to Liverpool street station when the bomb went off. Lest people are curious about that, I should perhaps explain that I was travelling for the entirely innocent purpose of going to Essex for an Orange parade. The following day I was in Belfast and had a chance to catch up with the papers and look at the photographs. It was clear to me and my colleagues there that the damage was superficial.
I wish that people would be more restrained in that respect. They should also accept that businesses must learn from the regrettable experience of their counterparts in Northern Ireland, who have had to deal with the situation for far too long. It is possible to have contingency plans. Businesses should gear the way in which they operate to enable them to get back into operation quickly. Regrettably, we in Northern Ireland have had to get back to business quickly. It can be done. It is not the end of the world. Indeed, that is one way in which the man in the street and the ordinary business man can do his bit to beat terrorism. He can demonstrate that it is possible to get back to business quickly and without any undue fuss.
Although there have been two major bombs, Bishopsgate and the Baltic Exchange, the point must be made—this is why I said that we are debating a belated measure—that the danger of major incidents such as those has existed for a long time. That danger still exists and it is greater than people in England realise. For some time, the Provisional IRA has probably—I say "probably" because I cannot be precise—been putting greater resources into its bombing campaign in England than into its entire terrorist operation in Northern Ireland. By greater resources, I mean the commitment of skilled manpower, money and the rest.
Over the years, the IRA has built up an infrastructure in England which enables it to conduct a sustained campaign. Last year, more than 20 tonnes of home-made explosives were recovered in London alone—and every

last ounce of that was probably manufactured in London. I asked the Home Secretary a question about that in the middle of last year, and although he did not disagree with the estimate he did not do what he should have done and make the public aware of the position. Manufacturing home-made explosive takes time and a large number of people. If the public are properly alerted about what to look out for, it should be possible for them to play their part in suppressing the campaign, but they must be told how to be vigilant and how to assist the authorities. It does no good in the current situation to pretend that there is not a problem and thus fail to involve the public fully in the fight against terrorism. A tremendous resource is available in terms of potential public support, but it is not being fully utilised.
The Minister referred to comparable arrangements in Northern Ireland and said that legislation had existed both in Northern Ireland and in Ireland to deal with costs arising out of this kind of situation, and he is right—it has existed for not far short of 300 years. I should welcome the opportunity to dilate on some of the advantages of that 18th century legislation, which contains some interesting features. Any hon. Member who wishes to discuss the matter with me is welcome to do so after the debate.
The Bill applies to Great Britain and its provisions do not extend to Northern Ireland. May I be assured that in no circumstances will the provisions be extended to Northern Ireland, that the existing Northern Ireland legislation will remain substantially in place and that the cover and provisions for compensation will not be diminished by any temptation to extend provisions of this type to Northern Ireland? I want that assurance because I consider the provisions in the Bill to be inadequate. They are not good enough, and they are certainly not so good as the statutory provisions in Northern Ireland. I should hate to see the Northern Ireland position undermined as a result of the introduction of measures such as these. We in Northern Ireland do not want to be driven back into taking a market-based approach, particularly in view of the record of some English financial institutions in regard to the problems of Belfast over the years. Apart from that, I am referring to a matter of general principle.
Hon. Members may have gathered that I regard the provisions in Northern Ireland as better than those in the Bill. They are better because the statutory provisions in Northern Ireland are comprehensive. This reinsurance arrangement will not be comprehensive. Under the existing provisions in Northern Ireland, wherever property is damaged as the result of violence or terrorist activity there is provision for compensation. Under the reinsurance arrangement before the House, compensation insurance will be available only to people who first take out insurance to cover the terrorist risk.
I made that point in an intervention in the speech of the Minister, and it was made by the hon. Member for Tottenham (Mr. Grant) when he referred to people who lost out in the incident of which he spoke. He paid tribute to those people, and I underwrite that tribute. They behaved in a highly responsible and brave way, but even if they had not behaved so bravely I should have thought that they would still have a good claim on the public purse for compensation. And it is not just taxi drivers—the same could happen to anyone. Any driver could find his or her car being hijacked and used for a similar purpose. Must every person who owns a car in Britain stop and think about the risk? The Minister said that people who felt


themselves to be at risk should take out additional insurance. How can the man in the street or the ordinary business man assess the risk that he may be facing?
It is wrong to think that the risk exists only in the City of London. We know how adept the Provisional IRA is at switching from one area to another. As soon as it is anticipated that the IRA will do one thing, it switches and does the unexpected. That is the way terrorist organisations operate—the risk could be anywhere. We have reason to suspect that there is a significant terrorist infrastructure in London. There is also reason to suspect that there is a significant terrorist infrastructure in the north-west of England. There may be others elsewhere. We do not know what structures have been set up. We do not know what sleepers there are elsewhere. The risk is not confined to certain geographic locations or to certain categories of persons. The risk is more general.
It is inadequate to say to the public, "You should take action only if you feel yourselves at risk." The reason why legislation was originally introduced for Ireland in the 18th century, which was not a period of Government interventionism, was that it was recognised—correctly—that there is a particular responsibility upon Governments to maintain public order. That is one of the primary purposes of Government. What we are dealing with here are the risks and the damage which affect people as a result of a failure to maintain public order. That is why there is compensation for riot damage, and that is why there ought also to be compensation for damage caused by terrorists.
The primary advantage of the legislation in Northern Ireland is that it is comprehensive. Another of its advantages is that there is a degree of governmental control. Because the compensation scheme is administered by the Government, they have a measure of control over its operation. After major terrorist incidents, one serious danger is that there will be fraudulent claims. What measures will be taken, in terms of the Pool Reinsurance agreements, to cover that? Will the Government just rely upon the insurance companies to detect fraud? Will the insurance companies have an economic interest in detecting fraud, or will they be tempted to pass on the risk to the insurer of last resort, the Government?
Under the criminal damage legislation, there is a statutory framework within which one can determine the extent of consequential loss. What will be the position under these arrangements? Will the extent of cover for consequential loss differ from one insurance company to another, with the Government merely picking up the tab through the pool, or will policies contain standard terms to ensure equal cover?
What will happen about betterment? That is a significant problem. When there is damage of this nature, the person whose property is destroyed gets new for old when he rebuilds, and in some respects is better off. One suspects that some businesses in Northern Ireland have prospered because of the number of times that they have been blown up. I am thinking of hotel businesses. The result is that now they have much bigger and better hotels than they ever had to begin with. An ironic consequence of the campaign is this question of betterment. What provision will be made by insurance policies to deal with it? There may be other factors, too.
I will say no more about the Northern Ireland legislation. I merely say that I believe that the Northern Ireland scheme is superior to this one. It may have been thought necessary to introduce this legislation because it is speedy and setting up a proper compensation scheme would take longer, but the best thing to do in the long run is to have a proper compensation scheme.
This last-minute measure, which the Minister says is temporary, smacks to some extent of the Government's whole approach to the problem of terrorism—a little half-hearted and a little too late. The Government are not committed to dealing with the problem. I detected that approach in the Minister's final comments. He referred to the underlying problem and said that terrorism would not succeed because the IRA had failed to move the Government an inch. That ought to be the position—I wish to God it were—but everyone knows that it is not.
Terrorist operations have moved the Government quite a considerable distance in terms of compromising the integrity of the United Kingdom, in terms of eliminating the democratic process in Northern Ireland, in terms of giving the parties which share the objectives of terrorism a say in the government of Northern Ireland, and sometimes in terms of appearing, as the Government did in the recent talks, to be neutral about the Union. The way to defeat terrorism is to be positive about the Union and to demonstrate clearly that the Government oppose not just the means that the terrorists adopt but also their objectives.

Mr. Peter Viggers: The House has listened with keen interest to the speech of the hon. Member for Upper Bann (Mr. Trimble). Having served as a Northern Ireland Minister, I understand the points that he made. I agree with him completely that Great Britain has a great deal to learn from Northern Ireland in terms of its response to terrorist incidents and in terms of showing its determination not to be overwhelmed by terrorist pressure.
The fact that sometimes the media get over-excited may lead to a misinterpretation of the public's attitude to terrorism. The hon. Member for Tottenham (Mr. Grant) spoke movingly on behalf of his constituents. He showed in his graphic speech, to which we listened with keen interest, just how widespread the damage done by terrorism can be and how completely universal is the revulsion against terrorism.
To follow up one point that was made by the hon. Member for Upper Bann, it is not for me to answer on behalf of the Government, but the hon. Gentleman said that there is a significant difference between the Northern Ireland and Great Britain schemes. He praised the benefits of the Northern Ireland scheme and asked what would happen about betterment in the Great Britain scheme.
As I understand it, the scheme for Great Britain which we are now discussing walks around that problem. The initiative for sorting out the problem will remain with insurance companies. The Government will merely stand behind them and prevent insurance schemes from being blown aside by the present lack of reinsurance. The detailed problem relating to betterment will not arise under the Great Britain scheme, because control over that matter will remain with the insurance companies.
I asked the Minister to spell out the difference between the proposed scheme for Great Britain and the scheme that operates in Northern Ireland. I thought it appropriate that it should be on the record that there is a difference between the two schemes; I thought it appropriate, too, that the Government's explanation of why there should be a different scheme for Great Britain should be on the record. When I asked that question, I was not seeking to suggest that the Great Britain scheme should be comparable to the Northern Ireland scheme. The two situations are different. Therefore, I warmly welcome the scheme that the Minister has laid before the House today. I believe it to be the right scheme for Great Britain.
I declare an interest, to which I referred during my intervention. I am an elected member of the council of Lloyd's of London, and since 1973 I have been an underwriting member of Lloyd's. I declare that interest in much the same way as a house owner might declare an interest when the value of his mortgage exceeds the value of his house. It is a negative interest this year. Nevertheless, I declare my interest in Lloyd's with pride, for it has been the focal point of insurance in the United Kingdom for the past 300 years. It is a crucial part of the success of the City of London in making London the centre of the insurance market.
Lloyd's leads in most major insurance risks and is now fighting valiantly, in my view, to put its house in order so as to win back the confidence that has certainly been prejudiced and lost as a result of the terrible losses of recent years. I am confident that Lloyd's will fight its way back. In parentheses, may I say that Lloyd's very much appreciates the interest and the understanding of its situation that has been shown by the Minister and the staff of the Department of Trade and Industry. Having said that, however, I must point out that I do not in any sense speak on behalf of Lloyd's. My speech is entirely on my own account.
It was necessary that a scheme such as this should be brought before the House. Late in 1992, it became apparent that the reinsurance interests—the big continental and American reinsurance companies and groups, through which much of the insurance of the City of London and other parts of the United Kingdom is frequently placed—had been destabilised and that they were not confident about continuing their reinsurance arrangements. The result was that the insurance market was destabilised. Therefore, it became necessary to introduce a stabilising element.
I believe that I was the first to raise this issue on the Floor of the House, late in 1992. I did so with diffidence, because I was sad to think that a stabilisation measure should be necessary. Nevertheless, it was necessary. Industrial interests made this very clear to the Government. The insurance industry was not making the point that it required support or subsidy; it was spelling out in clear terms the fact that insurance would not be available if reinsurance were not available and that if insurance in the City of London were not available it might be impossible for companies to continue to operate there. Thus the position of the City as a world capital market might be under threat.
There is no question of insurance interests seeking support subsidy in that sense. What they need is stability. In urging the Government to act, they were not speaking on their own behalf. It is quite clear that they were pushing at a door that was ready to open. The Government were

looking carefully at the whole issue and Ministers were quick to come forward with an appropriate measure. I repeat that there is no question of this Bill's representing a subsidy for the insurance industry. The medium-term intention is that it should be a stabilising measure and that it should be neutral in terms of Government cost. I suspect that in the short term there will be an element of subsidy. A number of matters will have to be explored very carefully in Committee. These days, every Bill states whether there will be an additional demand by way of public-sector manpower. I see that in this case two additional posts in the Department of Trade and Industry will be required. I am afraid that the two people appointed will have to work extremely hard in the next year or two.
Of all industries, the insurance industry is international and is responsive to market forces. I have already referred to the fact that, although London is the centre of the insurance world, it uses extensive overseas reinsurance facilities. As the industry is so international and so responsive to market forces, premiums will respond quickly to perceived risk. I believe that the situation will stabilise rapidly, thanks to the measures that are being taken.
I welcome the Bill. It will stabilise the industry and, in due course, enable the Government to withdraw. As I have said already, many points will have to be raised in Committee. I am sure that hon. Members look forward to making their points at that stage. In the meantime, I thank the Government for introducing the measure, which I thoroughly welcome.

Mr. Harry Barnes: The hon. Member for Beaconsfield (Mr. Smith) referred to the memorandum on the financial effects of the Bill. I should like to quote part of the explanation:
The costs to the Government of the arrangements envisaged will depend on the level of terrorist damage suffered by properties covered by the arrangement, and therefore no precise estimate is possible.
That arises from the peculiar circumstances of the measure, and I do not want to argue against it in any way. Essentially, what we are dealing with is an IRA bombing campaign in this country. However, the Bill is general and will apply to any type of terrorist activity. Clause 2(2), in defining an act of terrorism, does not refer simply to acts intended to overthrow Her Majesty's Government or to influence them by force or violence. Other Governments are included. I am thinking of the embassies of other countries, whether the Governments of those countries are de jure or de facto. Presumably, if an attack were made on the mission of Eritrea—a country that has not yet been formally recognised but is likely to be recognised on 24 May—it could be dealt with as would be an attack on a subsequent embassy. We are dealing with a general legal situation, although it has its origins in IRA activity.
Businesses can take certain action to contain the cost and lessen the impact of terrorism. In this regard, they ought to direct their attention to the moral, political and financial support that can be given to organisations—many of them in Northern Ireland—that try bravely to face up to terrorist activity, whether of the IRA or of Protestant paramilitary organisations such as the UDA. It should be recognised that there are people who seek to undermine bodies such as the IRA and to remove the


conditions in which they can develop. This is a matter to which commercial interests would do well to pay some attention.
The Peace Train organisation was formed as a result of the disruption of rail services, especially between Dublin and Belfast. The purpose of disruption is to have traffic moved from the railway to other types of transport that are susceptible to rackets. In addition, the British troops who have to clear railway lines that have been tampered with are vulnerable. Although there has recently been some similar IRA activity, the Peace Train organisation has been quite successful. Following deaths at railway stations and explosions on railway lines in this country, the Peace Train people organised a run from Belfast, through Dublin, Dun Laoghaire and Holyhead to Euston. People from 17 political parties in Northern Ireland, the Irish Republic and Britain were involved, and the President of the Republic, Mary Robinson, gave her support.
It is important that businesses should support such activities. Obviously, many people who have no party political connections are involved. I refer in particular to a group called Families Against Intimidation and Terror. In Northern Ireland, the IRA and the UDA try to operate no-go areas in which they take charge of law and order. When there is lawlessness in an area, such people try to move in and take over from the proper authorities. Knee-capping is one manifestation. The IRA shoots up Catholics, and Protestant paramilitary organisations shoot up Protestants.
It is good to have an organisation in which Protestants and Catholics unite against such activities. A very impressive meeting, involving three Protestants and two Catholics from Ireland, took place in this building. The common experience of those people obviously affects businesses in Northern Ireland. These are moves with which we ought to be associated. There are many community organisations and bodies such as the Irish Association, Co-operation North, Glencree, Women Together, Lurgan Interfriendship, the Peace People—and Peace '93 which emerged after the Warrington bombing and held a massive rally in Dublin. Business needs to be aware of those organisations because they could have an impact on how the legislation operates.
I am associated with one such group, New Consensus, which operates in Ireland and in Northern Ireland; there is also a group in Britain. I am privileged to be one of its presidents, together with the hon. Member for Eltham (Mr. Bottomley) and Lord Hylton, who is a CrossBencher. I hope that that shows what needs to happen here and in Northern Ireland on a cross-party, cross-community basis. The people whose names appear on the letterhead of that organisation are from different parties, as are the vice-presidents—my hon. Friend the Member for Western Isles (Mr. Macdonald), the hon. Member for Southwark and Bermondsey (Mr. Hughes) and the hon. Member for Staffordshire, Moorlands (Mr. Knox). Not only do the presidents and vice-presidents represent different parties but my hon. Friend the Member for Western Isles and I represent different wings of the same party. Such activity should be encouraged—

Mr. Deputy Speaker (Mr. Michael Morris): Order. The hon. Gentleman's remarks should relate to the Bill.

Mr. Barnes: I am grateful that you have been so generous, Mr. Deputy Speaker, on the points that I have made so far. I think that they were relevant to the measure because of the expenditure that the Government may be involved in due to acts of terrorism. What is needed is action that begins to undermine the development and the growth of terrorism. There are things which business can do to assist that. That was the logic of the points that I was making.
The debate has been fascinating. Quite often, hon. Members make similar speeches and have party briefs to speak to. Usually, different parties argue different positions. So far, the contributions to the debate have represented different interests. My hon. Friend the Member for Tottenham (Mr. Grant) made a telling contribution. If we were debating the politics of Northern Ireland, hon. Members might have different views on the way forward and on how to undermine the activities of terrorists, but hon. Members are united on the Bill.

Mr. Peter Bottomley: I wish first to make two apologies and to pay one tribute. My first apology is to the hon. Member for Middlesbrough (Mr. Bell) for missing his speech. I heard the speech of my hon. Friend the Minister, but I had to leave the Chamber to pay a tribute to Robert Adley and did not hear the speech of the hon. Member for Middlesbrough.
My second apology is not to anyone in the House. When one of my constituents, Stephen Lawrence, was murdered recently, I would have liked to have had the chance to raise in the House the unprovoked racial attack which resulted in the murder of a fine young man who was black. There may be another occasion when I can do that, but I wish to say to his family that issues relating to terrorism are no more important than the incident which caused them such suffering.
My tribute is to my hon. Friend the Minister. There has been a general welcome for the Bill, in which I join. I also pay tribute to the way in which my hon. Friend introduced it. He did not give way to the temptations which were obviously present. The hon. Member for Upper Bann (Mr. Trimble) was right that avoiding exaggerated reaction to the aims of terrorists helps reduce what they achieve.
People who set off bombs and who carry out assassinations, whether they have picked out targets or are casual about whom they kill, seek publicity and public reaction. That public reaction may include what insurers feel that they may or may not be able to afford to provide cover for. The public reaction may include what the Government decide that they should properly do. Certainly, it includes what the Provisional IRA was trying to achieve in the mid-1970s and failed to do in the mid-1990s, which was to drive a wedge between the Irish and British communities.
It is becoming ever clearer that there is no wedge between the Irish and the British. The Warrington bomb helped to focus attention on a development over the past 10 years: that more and more Irish people are saying openly, "This is not done in our name." That is a very important thing for the Irish to say. It is important for those of us who are in part Irish, or in large part not Irish, to be able to stand with the people in the Irish community


in Dublin, Belfast and London and say that we understand what the terrorists, the bombers and the killers are trying to achieve.
The hon. Member for Tottenham (Mr. Grant) made an impressive speech. His points could not properly be answered by one Minister. The Minister who will reply to the debate can only say that some of those points do not concern the departmental interest which he covers.
I do not believe that the Bill should be amended to cover the point, but when we think of all the interests involved—the insurance interest, the City interest arid the national interest—if we cannot enable the two heroic minicab drivers to carry on with their trade, by providing insurance cover and vehicles, we are not the sort of country that I believe we are.
Perhaps someone in the City of London corporation could find out whether, by passing round a hat or by applying to an existing fund, the minicab drivers could be put at least in the position that they were in before they were commissioned to take bombs to Downing street and elsewhere. When awards are being made for valour or gallantry, I think that most people would regard it as appropriate that they should receive such public recognition.
As to the points made by the hon. Member for Derbyshire, North-East (Mr. Barnes), it is important to reduce the costs of insurance, reinsurance and guarantees to Pool Reinsurance. There are different ways of doing that. Some, which are for another debate, are hard security measures. We do not want to turn the City of London, the city of Westminster or any other part of the United Kingdom into a no-go area because that is not what a free and open society is about. Part of the solution is to continue showing in various ways that the terrorists—this applies to disloyalists just as much as to the Provisional IRA—are not achieving what they are after. If we can understand some of the underlying grievances, and say so out loud, they will be less able to exploit them in recruiting people to their illegal criminal substitute for politics.
We must also recognise that bombs are set off and people are murdered to get publicity and public reaction. We must turn that against the terrorists. The hon. Member for Derbyshire, North-East made a passing reference to the Peace Train. When I was a Minister in Northern Ireland, I was responsible for railways. I leave with the House one experience. On most days, the rail service was interrupted by bombs, hoax bombs, calls and hoax calls. The IRA was trying to get the same publicity as that which followed a tragic level-crossing crash at Slaght outside Ballymena, which was not terrorist-related. The IRA knew that it was not possible, either in the City of London or on a railway line in Northern Ireland, for the security forces and the railways to be able to react almost perfectly to every incident. Therefore, it tried to cause the sorts of deaths and crashes that we saw outside Ballymena. For six weeks after that, there was no interruption to the railway service.
It is possible to turn the publicity and public reaction against the IRA. I hope that one memorial to Edward Henty will be a newspaper drive for understanding of what people want when they have the sort of explosions with which the Bill is partly designed to cope.
Without straying too far from the Bill, it is worth saying that, in my experience of working across the denominations in central America and South Africa, every group that would otherwise have turned to using bombs if they

wanted to make a point, either in their own country or perhaps in London—I should say in passing that we still do not know who caused the bomb in New York; it could have been an IRA-related bomb or one linked to Yugoslavia—

Mr. Deputy Speaker: Order. The hon. Gentleman is stretching it now. The Chair was patient with and understanding of the hon. Member for Derbyshire, North-East (Mr. Barnes), but allusions to New York and South Africa go way beyond the scope of the Bill. The hon. Member for Eltham (Mr. Bottomley) should either come back to the Bill or draw his remarks to a conclusion.

Mr. Bottomley: I anticipated guidance from the Chair because I was about to say that, if we want people to understand why we need to control the public expenditure costs related to the Bill—I would not anticipate guidance that that was out of order—we need to understand that it is not done simply by a reinsurance pool. Establishing the pool or providing a guarantee if the pool is exhausted leads to increased public expenditure which it is the primary duty of the 651 hon. Members in the House, whether they are below the Gangway or occupy the Speaker's Chair, to reduce.
Reference has been made to the need to deliver public order—we were reminded of that by the hon. Member for Upper Bann and other hon. Members. The point is that other people have given up violence when they have the opportunity to vote. In the House, we have the opportunity of debate as well.
Those who are concerned about reducing their insurance premium—that is, for insurance up to £100,000 —and those who will pay extra to the pool should accept the invitation to consider other ways of reducing the background to the events against which they are protecting themselves and against which the House and the Government are trying to protect them. That does not simply mean understanding why it is wrong for people to let off bombs and bullets and why it is important to understand the words of the seven-year-old to her parents after the Baltic Exchange bomb, "Why are they trying to hurt me?" Such a question can draw a response from those around the disloyalists and the Provisional IRA. Effectively, the cross on which that girl is put becomes as important and as powerful as the cross on a ballot paper. In the end, those two forms of the cross will outfight the bombers and those using guns to intimidate or kill others.
I suspect that if people in the city—I do not mean simply the city of London, because the cities of Westminster, Warrington, Manchester, Leicester and so on are also important—understand that they can provide support to non-governmental organisations, which may be by small amounts of money but mainly by a degree of interest, we shall find that in the United Kingdom, as in other countries around the world, the terrorists will understand that they will not be successful with their present methods.
There are ways to increase understanding, but I recommend that people should not simply listen to this debate. When a book called "May the Lord in his Mercy be Kind to Belfast" by Tony Parker is published next week, people will get a greater understanding and be able to share in such debates inside the Chamber and outside.

Mr. John Bowis: To follow the hon. Member for Derbyshire, North-East (Mr. Barnes) and my hon. Friend the Member for Eltham (Mr. Bottomley)— without testing your patience or tolerance, Mr. Deputy Speaker—they were talking about a reinsurance policy. It was not necessarily the reinsurance policy in the Bill, but, nevertheless, an important reinsurance policy for future peace in these islands.
It is a pleasure to follow the hon. Member for Derbyshire, North-East because earlier this week I followed him when we were talking about ending violence in another part of the world—in Africa—and seeing how the pieces can be picked up after a 30-year war and contributions made towards that. In this debate, we are talking about a similar period of violence and destruction and how we can help to ensure that the pieces are picked up.
This measure will not defeat terrorism, but it will help to ensure that the objectives of terrorism are not achieved. Terrorism has many forms, but the terrorism that we see, especially in this island, is aimed at a number of objectives. My hon. Friend the Member for Eltham paid tribute to constituents of the hon. Member for Tottenham (Mr. Grant), and we all share that. The spirit to which he referred is a British spirit, although it incorporates someone who came to the United Kingdom from Ethiopia. That spirit is the reason why the aim of killing and maiming cannot succeed.
In my constituency, I have had attempts to disrupt services—two bombs were placed on railway lines outside Clapham Junction. Neither of those attempts succeeded because the people who run and organise the services got going again. Within half an hour of my being on those sites, the trains were running and people were getting back to work. That is the way in which we prevent the objectives from being achieved.
Another objective is that of causing as much economic damage to the United Kingdom as the terrorists can manage. The Bill will ensure that the objective is not achieved. The economic damage may be damage to business premises or shops and jobs. It may be damage that is done to the financial base that underwrites the United Kingdom economy—in particular, the insurance industry. Attached to all that was the attempt to destroy a church in the City and the reaction and response to that. None of the objectives will be achieved.
This Bill, which my right hon. Friend the Minister of State introduced after some of the most able deliberations and consultations with the people most affected and the experts in the field that we have ever had, will go a long way to provide the collective response that we need to ensure that the terrorist objective fails. The measure is right and is welcome. It is right because it is the safety net —it plugs the loopholes. As my hon. Friend the Member for Beaconsfield (Mr. Smith) said, the costs will be monitored and regular reports will be made. Reference was made to the fact that we must ensure that fraud is not allowed to creep into the system.
We must stress that the measure is based on the principle that it will in no way assist the uninsured. People may have the impression that we have introduced a measure which will mean that they will not need to bother in the future—the Government will pick up the tab. The hon. Member for Tottenham should tell the minicab driver

in his constituency that the Government have not done anything in the measure to discourage him from taking out full comprehensive insurance in the future. I believe that that driver suggested that such insurance might cost £2,000 for a £1,500 car. He should shop around: the only justification for such a premium would be a very bad record and, no doubt, no one with such a record would be driving a minicab. The hon. Gentleman's constituent can be reassured that affordable insurance is available; however, I take the point about compensation for any threat to his livelihood.
It is important not to distort the market and I believe that the Bill goes to great lengths to ensure that that will not happen. It provides a safety net, rather than competition with existing insurance facilities. Some legislation presents us with a temptation to step in, but this Bill does not: although it commits us to ensuring that the risk is underwritten, it will encourage neither high costs nor inefficiency in the system.
The Bill also requires everyone in the community, especially those running businesses, to take sensible precautions against terrorism. Firms in my constituency have expressed concern about structures that could be at risk—gas holders, for instance. We must ensure that such risks are tackled by the managers of the establishments concerned. A home owner does not simply rely on his insurance company to protect him once his home has been burgled; he must also rely on his initiative to make such damage less likely. It is crucial to take such precautions, with police advice.
I hope that my hon. Friend the Minister will clarify three points. When I intervened on the hon. Member for Middlesbrough (Mr. Bell) on the subject of looting, he responded fairly up to a point; that point involved the protection of an establishment by a security service or firm. Will the payment of insurance following a terrorist act be dependent on such protection, or will the protection be the norm in any event, regardless of whether an act of terrorism has taken place?
My second point concerns the definition of "terrorist", which lawyers doubtless have at their fingertips. Terrorism in London has not always been connected with such bodies as the IRA; London has experienced other forms of anarchistic, violent vandalism. At what point does such action become terrorism and qualify under the Bill?
Thirdly, how will Lloyd's fit in? The way in which companies and their reinsurance companies will join the Pool Reinsurance Company is fairly straightforward, but I am not sure how Lloyd's will do so without undermining the unlimited liability criteria on which it has been judged in the past. Agreement may have been reached and Lloyd's may have taken account of this in its plans for the future; none the less, I believe that the issue should be clarified.
We should pay tribute not only to the Government, but to the British insurance industry. It has taken some knocks; risks have gone wrong and it has had bad publicity from time to time. Ultimately, however, when something goes wrong in our households, businesses or jobs, it is to Lloyd's that we turn and it rarely lets us down. The Bill will ensure that it will not let us down in the event of terrorist acts of violence and vandalism.

Mr. Bell: With the leave of the House, I should Like to wind up briefly on behalf of the Opposition.
The hon. Member for Battersea (Mr. Bowis) had the benefit of my legal advice earlier. I am happy to say that it was covered by privilege, being given on the Floor of the House, so I am not liable if it turns out to be wrong. I shall, however, leave it to the Minister to give his definition of terrorism as he sees it, and to define the participation of Lloyd's. It would be interesting to know how it can participate, given its syndicate system.
We enjoyed the eloquent speech of the right hon. Member of Westminster, North (Sir J. Wheeler) about the role of the City of London police. We sometimes forget that they are separate from the rest of our police Force. They have played a strong and significant role in the face of difficult and serious circumstances.
The hon. Member for Gordon (Mr. Bruce) demonstrated the unanimity of the House. When the hon. Member for Battersea congratulated the Government, I thought that he would also congratulate the Opposition not only on supporting the Government fully, but on making clear their support beforehand so that hon. Members unable to be present could leave earlier. The hon. Member for Gordon spoke of the Government as the reinsurer of last resort, and of the capital base behind them. It is, of course, money in the bank for anyone whose claim ends up on the desk of the Pool Reinsurance Company and could not be met in any other way.
The hon. Member for Ryedale (Mr. Greenway), who declared his interest at an early stage, made an interesting point. He said that he thought that there should be mutual cover for mutual risk, leading to mutual insurance. That was a valid point, which again demonstrated the significant role that insurance can play in the community and the need for all of us to pull together.
The hon. Member for Upper Bann (Mr. Trimble) based his speech on personal experience in Northern Ireland. He referred to what one might describe as the excessive publicity which follows terrorist acts. Having examined the press coverage of such events in preparation for the debate, I feel sure that there is excessive publicity. I am reminded of the sinking of an oil tanker off the Shetlands. The television reporter asked someone on the spot, "'What is the worst that can happen now?" I think that we spend too much time considering the worst that can happen, rather than the best. Given the means available to the state as the reinsurer of last resort and the flexibility of the insurance market, it is clear that we can respond to the crisis in the market and ensure that businesses continue.
The hon. Member for Beaconsfield (Mr. Smith) showed the Opposition a ray of light when he said that it was appropriate to intervene in markets when they failed. Opposition Members will remember that in times to come: every time we call for intervention, we can justify it on the basis of market failure. My hon. Friend the Member for Tottenham (Mr. Grant) made a first-class constituency speech, showing the kind of speech that hon. Members can make on the Floor of the House when they are not inhibited by the Whips and are free to speak on behalf of their constituents. The Whips look up in surprise, but one of the great attributes of today's debate has been the absence of any contribution from them other than benign nodding and an occasional glance at the clock.
By drawing national attention to the plight of his two constituents, my hon. Friend the Member for Tottenham rendered a significant service not only to them but to the debate and to the standing of the House of Commons. We were also grateful for the contribution of the hon. Member for Gosport (Mr. Viggers), who spoke both as a former Northern Ireland Minister and a Lloyd's name. He brought some extremely helpful knowledge to the debate.
My hon. Friend the Member for Derbyshire, North-East (Mr. Barnes)—who has devoted a good deal of his parliamentary time to the group known as New Consensus—introduced an extra dimension in relation to what can and what should happen, and spoke of the possible role of Northern Ireland in making Bills such as this unnecessary in future.
The hon. Member for Eltham (Mr. Bottomley) made an interesting speech. He, too, is a former Northern Ireland spokesman. He mentioned Mr. Robert Adley. I must tell the House that when I heard of Mr. Adley's death this morning I put on this tie in his honour. He and I shared an interest in ties with the hon. Member for Gosport and other hon. Members, and I think that his wife Jane would be gratified to know that on the day of his death reference has been made to him in the Chamber.

Mr. Viggers: We do not often have an opportunity to pay tribute to an hon. Friend, but I should like to add to the comments made by the hon. Member for Middlesbrough (Mr. Bell). It was courteous of him to refer to our late colleague Robert Adley, who was held in great affection in the House.

Mr. Bell: I am grateful to the hon. Gentleman for those remarks.
I think that I have covered the issues raised, and I have one or two points to put to the Minister. It has been stated that the legislation is retrospective. The question is whether the Bill is genuinely retrospective. I am satisfied that it is, and that when enacted it will be retrospective. The Minister may wish to clarify that. There is consensus in the House on the measure.

8 pm

Mr. Neil Hamilton: With the leave of the House, I shall reply to the debate. I congratulate all hon. Members who have participated—our proceedings have revealed a remarkable and rare unanimity among us.
In the debate, I have been accused of introducing interventionism. It just goes to show what a wet left-winger like myself, when introduced to the Department of Trade and Industry, can do to effect changes in Government policy. As I said in my opening speech, such interventionism is designed to correct a market failure where the national interest requires it.
I have never been an anarchist who does not believe in any Government intervention. I have always believed that the national interest should be safeguarded by the Government, but I have taken a different view of the national interest from that of, for example, the hon. Member for Derbyshire, North-East (Mr. Barnes). It is a sign of the unanimity in the House that the hon. Gentleman, from one wing of the Labour party, and myself, from the opposite extreme of the political spectrum in the Conservative party, were able to unite in support of the Bill.
I accept the correction of the hon. Member for Middlesbrough (Mr. Bell), for whom I have the highest respect, when he referred to my mention of the infinitesimal chances of the IRA or any terrorist group succeeding in compelling the British Government to change policy as a result of acts of violence. He said that the correct word should be "non-existent", and I certainly accept his correction, although "infinitesimal" means so small as not to be perceived.
I certainly agree that we in this country can never allow Government policy to be dictated by acts of violence. We may have to respond to acts of violence with measures such as the Bill, but the achievement of the political objectives that inspire the violence will never be conceded by Her Majesty's Government, whatever their political complexion. To do so would be to subvert the basis of democratic society and institutions of democracy such as the House.
We should allow ourselves some general reflections on the Bill's purpose. My hon. Friend the Member for Ryedale (Mr. Greenway) was right to say that we should all become more vigilant. There have been some recent terrorist apprehensions by the police. I certainly agree with my right hon. Friend the Member for Westminster, North (Sir J. Wheeler) that the City police, the Westminster police and the Metropolitan police deserve the highest praise for the way in which they handled the consequences of the bombs in the City and elsewhere in the capital.
As a consequence of increased public vigilance, we have been able to apprehend terrorist suspects, and we hope that those responsible for all the acts of violence will be apprehended. Through our vigilance, we can all participate in the national interest.
My constituency borders the borough of Warrington. Bronwen Vickers, whose leg had to be amputated as a result of the explosion in Warrington, is one of my constituents. The effects of terrorist violence have been felt in the north-west of England, which is close to home for me. It must be the united desire of everyone in the House to remain vigilant and to help to defeat the current terrorist outbreak that is causing so much hurt.
I agree with the hon. Member for Upper Bann (Mr. Trimble) and my hon. Friend the Member for Eltham (Mr. Bottomley), who paid me a surprising compliment by commenting on the moderation that I have displayed during the debate: we would play into the hands of terrorists if we exaggerated the consequences of violence. I believe, and always have done, that the best response is to be resigned but determined.
We must be determined not to be deflected from our political objectives and to say, "Try as you might, and although it may hurt us or cost us money, we shall then bear the cost that you impose on us and redouble our efforts to preserve the essence of our democratic system free from the taint of violence." We shall respond by the counter-measures that we take—not only by policing, but by introducing measures such as the Bill—in order to neutralise, and more than neutralise, the effects of the violence used in an attempt to defeat the democratic process.
I have been asked a number of technical questions, and I shall try to respond to as many as possible. I know that there is considerable interest in the next debate, so I shall

not delay the House too long. My hon. Friend the Member for Beaconsfield (Mr. Smith) mentioned the Bill's retrospective application. The Bill is drafted to apply to contracts of insurance entered into from 1 January. That date does not appear in the Bill, but that general power is contained in the Bill, and it has been made plain during the debate that it will apply to contracts of insurance from 1 January.
The sums of money that the Government ultimately may have to be paid will be identified in a separate vote within the Department of Trade and Industry's votes. Any accruals that may fall due will appear in the appropriation accounts. There will be opportunities in Parliament during the year to debate the way in which the scheme has worked. There will doubtless be other general debates as well.
I cannot commit the Leader of the House or the business managers, as I am now inhibited and no longer an inhibitor as a member of the Whips Office. Therefore, I cannot say to what extent we shall be able to debate matters related to the Bill once it is enacted, as I hope it will be. I am sure that there will be many opportunities for us to discuss the Bill's general principles and the way in which it has worked in practice.
My hon. Friend the Member for Beaconsfield also asked about the costs of the recent explosion at Bishopsgate. I return to the remarks of the hon. Member for Upper Bann, who deplored the knee-jerk reactions, scaremongering and exaggerations of the instant pundits that were so gleefully reported by the press. I think that people, particularly those who work in the City of London and the insurance industry, should know better than to respond with the comments that we heard in the immediate aftermath of the explosions, both at St. Mary Axe and at Bishopsgate.
As was proved in the case of St. Mary Axe, the pundits were talking through their hats and did nothing but damage to the cause we are debating. They gave nothing but help to the IRA by their intemperate and ignorant comments. If there is another explosion, I hope that the instant pundits will curb their desire for a brief moment of publicity and say nothing until they know what they are talking about.
As for the cost of the Bishopsgate explosion, I am not in a position to give an accurate figure, because too many uncertainties still surround it. It is not yet certain how much work has to be done on some of the buildings, so we do not know how much the work will cost. We do not know how much of the damage was insured against terrorist risk. Some insurance policies hang over from last year and include terrorist cover. They will not expire until later this year. So many buildings that may have suffered as a result of the attack may already be covered by contracts of insurance. We therefore will not know the total cost for many months.
It is not yet certain how much of what has been insured will fall within the current arrangements, so we do not know to what extent Pool Reinsurance will be called on to pay out. Finally, it is not yet certain how high the income of Pool will be this year, so we cannot at this stage predict what calls on the Government there may be.
Although this may not be regarded as an informative response, it at least has the merit of accuracy—unlike some of the specific figures given by people for previous


explosions, figures that were subsequently found to be utterly misleading. It would be wrong to adopt that approach.
The hon. Member for Tottenham (Mr. Grant), in an excellent speech on behalf of his constituents, drew attention to the bravery of certain drivers and to their speed of thought. I share the regret expressed by other hon. Members about their loss, but I reiterate that the scheme is an insurance scheme. I cannot guarantee a solution to the sort of problem that the hon. Gentleman discussed. It depends on the degree of take-up as a result of the operation of the scheme.
I welcome other measures that are being taken, especially the establishment of a trust fund, from which I hope the losses sustained by public-spirited individuals such as the constituents of the hon. Member for Tottenham will be paid. I hope that people will contribute generously.
I have asked the insurance industry to ensure that third party, fire and theft policies always cover loss due to terrorism and explosions of this kind. There is no reason why such cover should be excluded; after all, the reason why we are debating the Bill is that, in the past, insurance companies did not consider the liability to which they might be exposed from terrorist explosions, because they were not a problem of which we had any great experience.
I fully accept the point made by the hon. Member for Upper Bann in support of the hon. Member for Tottenham—that there is a lacuna here; but it is not best plugged by Government compensation. The arrangement for Great Britain will be sufficient for our needs. The situation here is rather different from that in Northern Ireland, and we do not necessarily need a comprehensive scheme crafted in the same way to cover the whole country.
Unless I can be persuaded by some compelling argument to extend the scheme from Northern Ireland to Great Britain—no one has succeeded in persuading me yet, not even the eloquent hon. Member for Upper Bann —we will not adopt the scheme for Northern Ireland here. I cannot speak for my right hon. and learned Friend the Secretary of State for Northern Ireland. The attractions or otherwise of what I am introducing for Great Britain to the Northern Ireland Office and to Northern Ireland are a matter to take up with him. I am sure that the hon. Member for Upper Bann will receive the usual convincing response from my right hon. and learned Friend.
I will be happy to respond by letter to points that I have not been able to deal with this evening. I refer particularly to the small but important points raised by my hon. Friend the Member for Ryedale (Mr. Greenway). Meanwhile, I hope that the spirit of amity in which this matter has been debated this evening will survive. If we ever suffer a repetition of the appalling terrorist incidents of recent times, I hope that they will serve not to divide us, but to strengthen the unity that has been so amply demonstrated this evening.
I thank all hon. Members who have taken part, especially the hon. Member for Middlesbrough, who speaks with such authority for the Labour party on these matters. I thank hon. Members for assisting the quick passage of the Bill through the House, because people outside expect the Government to respond quickly in emergencies such as this.
I believe that the combination of swift action and measured response which this Bill represents is legislation

and Government action at its best. Government action with the support of both sides of the House is all too rarely found in our political system or, indeed, in political systems anywhere in the world. That is to the credit of all, and it should be a further demonstration to the IRA that its cause will never win.

Question put and agreed to.

Bill accordingly read a Second time.

Motion made, and Question put forthwith pursuant to Standing Order No. 61 (Committal of Bills), That the Bill be committed to a Committee of the whole House.—[Mr. Robert G. Hughes.]

Question agreed to.

Further proceedings on the Bill stood postponed, pursuant to Order [7 May.]

Orders of the Day — REINSURANCE (ACTS OF TERRORISM) BILL [Money]

Queen's Recommendation having been signified—

Motion made, and Question proposed,
That, for the purposes of any Act resulting from the Reinsurance (Acts of Terrorism) Bill, it is expedient to authorize—

(a) the payment out of money provided by Parliament of such sums as may be necessary to enable the Secretary of State to meet such obligations of his as are mentioned in the Act;
(b) the payment of any sums into the Consolidated Fund—[Mr. Robert G. Hughes.]

Mr. Bell: The Bill comes before the House as a result of the shortage of capacity in the worldwide reinsurance market and because of the fact that certain European reinsurance companies withdrew their support from our insurance market. It is therefore less to do with terrorism than with insurance.
Under clause 1, the power of the state comes in behind the insurance market and stands four square behind the market of the City of London. We welcome that.
Under clause 2, the Treasury will undertake any liability that may flow from the Bill. We welcome the involvement of the Treasury. We see that a mutual company is to be created, and we welcome that idea and urge all reinsurance companies in the country fully to involve themselves.
We see that the DTI will have certain responsibilities —two posts will be required. We know that the Department is responsible for oversight of our insurance market, so we welcome that aspect of the Bill too.
We commend the Third Reading of the Bill—

Madam Deputy Speaker (Dame Janet Fookes): Order. Perhaps I should let the hon. Gentleman know that we are discussing the money resolution, not Third Reading—although they may be virtually indistinguishable.

Mr. Bell: Since they are virtually indistinguishable, I shall leave my comments at that.

Question put and agreed to.

The House, pursuant to Order [7 May], immediately resolved itself into a Committee on the Bill. Bill reported, without amendment.

Motion made, and Question proposed, That the Bill be now read the Third time.—[Mr. Neil Hamilton.]

Mr. Bell: Having ensured that the money resolution and Third Reading are not mutually exclusive in lawyers' terms, I shall not repeat my earlier remarks. I shall say


only that the final message from the Opposition, which is similar to that from the Government, is that there is no future in terrorism, destruction and death. No political solutions are on offer. The message to the IRA, or any other terrorist organisation, is that it is not worth it—it is not worth a bean. I hope that that message comes over cleafrly.

Question put and agreed to.

Bill read the Third time, and passed.

Orders of the Day — Automated Credit Transfers

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Robert. G. Hughes.]

Mr. Calum Macdonald: I am grateful that Madam Speaker has chosen this subject for debate, because her choice recognises the social and economic importance of the effect of automated credit transfer upon rural sub-post offices nationwide. There have been six early-day motions on the subject over the past few months, attracting at least 200 signatures at the last count. It has been the subject of written and oral questions, including two in Prime Minister's Question Time, and a debate in the other place. There will be a debate on the subject, in Opposition time, next week.
Despite all the attention, the issue has not been resolved, nor have key aspects of it been made clearer. The issue is important, first and foremost, for the impact that it could have on the millions of pensioners who use their post office on a weekly basis to cash their pensions and benefits. For most pensioners, that weekly visit to the post office is the most convenient and desirable way to receive their benefits. It has many merits for them. It gives them an opportunity to catch up on news and gossip, and to find out what is happening in the local community and to friends and neighbours.
That visit is also an opportunity to gather from the postmasters and postmistresses other information that may be useful and beneficial to them. The individuals who work behind the counters are, as most hon. Members—certainly all who represent rural constituencies—will recognise, people who are made enormously knowledgeable by the very nature Of their work, combining as they do the functions of Government clerk, small shopkeeper and occasional social worker.
Perhaps I may be permitted to quote a postmistress in my local village of Garrabost, Mrs. Joan Anne Campbell. Speaking to the local newspaper, the Stornoway Gazette, Mrs. Campbell said:
Your local post office is more than just that—it is a public service. It is a place to get forms filled in, a place to meet and have a chat and, sometimes for those behind the counter, it's almost like being a social worker. A local sub-post officer is really the centre-point of a community and has a very important part to play.
That may have been said by someone working in a local post office in the Western Isles, but it will be recognised as valid and true throughout the rural areas of Britain.
Unlike banks, sub-post offices are easily accessible to the vast majority of elderly people who use them. As is not the case with banks, there are sub-post offices in the majority of villages throughout Great Britain. I have been quoted the figure of 60 per cent. of villages having a sub-post office. Those who run post offices are familiar with, and familiar to, their elderly customers. They provide a point of reassurance for the pensioners who use them. The Government should see them as an invaluable asset, rather than as an encumbrance or a drain on money that they have to stop.
The non-appearance one week of a pensioner who usually uses the post office will immediately be noticed by the local sub-postmaster or sub-postmistress. If a pensioner appears but looks a bit peaky, that will be noticed and observed. That kind of contact, that kind of


relationship between people, is unique to the post office network of Great Britain. It could not be duplicated by the banking service.
The system is not an archaic hangover, a traditional aspect of British national life that is best done away with. On the contrary, with the advent of care in the community, the social role of sub-post offices as dispensers of advice and services, as well as of pensions and benefits, ought to be enhanced, not diminished. If they had not had that network of 20,000 post offices and sub-post offices, the Government would have had to invent it when they came to implement care in the community.
It is a foolish economy for the Government to be considering closing rural sub-post offices, whatever the purported savings of a switch to automated credit transfer. What savings there will be may be at the financial expense of the pensioners, because of the charges that may be deducted by the banks or the loss of interest on delayed payments, which may be retained by the Government.
If the move goes ahead, it will be greatly to the detriment of pensioners, who will be much inconvenienced. The switch to ACT will mean that pensioners will lose the right to receive their pensions on a weekly basis. Payments will be made monthly In arrears. That may be convenient and financially attractive for the Government, but I cannot for a moment believe that it will be convenient for the pensioners. Many pensioners—perhaps even a majority of them—are relatively well off, but many live a hand-to-mouth existence. For them, it is impossible to conceive of budgeting other than on a weekly basis. It would make their lives still more difficult to have to be constantly a month in arrears because of the switch to ACT.
Pensioners also need to have cash ready to hand to buy the little odds and ends that they need on a day-to-day basis—groceries, newspapers and so on. Where can they obtain that ready cash if the Government go ahead and succeed in switching benefits to direct payments into banks? Pensioners will often have to cope with the fact that there will be no bank in their locality, and they will have to travel many miles to go into town to withdraw money for the week or the fortnight, on buses or even by hiring a taxi if the bus network is not there or the service is not convenient. That will be enormously inconvenient and troubling to many pensioners.
We must also bear in mind the fact that pensioners will have to visit the bank in person to draw money, whereas someone who is elderly, who is ill that week, or who is partially sighted or disabled, can send a representative to the local post office to pick up his or her pension. With banks that is not possible.
I have already mentioned the invaluable social role of the rural post office, and there is no doubt that the sub-post office network will be badly hit by the loss of the business that pensions and benefits represent. Inevitably, many will close as a direct consequence of the switch to the payment of pensions and benefits by automated transfer into bank accounts. Almost 13 million people visit their local post office each week to pick up their pensions, and that business from the Department of Social Security represents one third of the turnover of Post Office Counters Ltd. That is a greater proportion of business than comes from the Royal Mail, which represents only one fifth of the total turnover. Of that enormous benefits turnover, about 18 per cent. is drawn through sub-post offices.
Clearly the loss of the pensions and benefits business will have a direct impact on the viability of local sub-post offices. Moreover, the loss of that business will cause the loss of other business, on which sub-post offices rely to make them financially viable. We must remember that post offices are often shops as well, and that the people who come in to pick up their pensions also stop to buy newspapers, groceries, stationery and a variety of other goods.
If those people did not come in to pick up their pensions and benefits, they would not buy the groceries and newspapers either, and the loss of that secondary business would be a massive blow to rural sub-post offices. If offices had to close because the loss of that business meant that they were no longer viable, many villages would lose not only their post office but their only shop. That would be a severe blow to many villages.
The Government talk about offering their customers choice. However, if local sub-post offices close many people who would have wished to exercise that choice will be denied the opportunity to do so. They will be forced against their will to use automated credit transfer. The Government must take on board the fact that the exercise of choice by a minority, by making the sub-post office network no longer viable, could have a knock-on effect on the majority of people and in effect remove the choice that they would have exercised if the post offices in their communities had still been open.
There is another point to make about consumer choice. If the Government were merely offering information to pensioners about the existence of automated credit transfer, there would be little objection from either side of the House. The Government already provide the option of automated credit transfer, and there can be little objection to making that option widely known to pensioners and to others who might want to choose it, so long as the choice is offered in a neutral and even-handed way. But clearly, that is not happening.
Both the Secretary of State and the Under-Secretary of State for Social Security, the hon. Member for Maidstone (Miss Widdecombe), have made it clear that the Government are actively encouraging pensioners to switch to automated credit transfer. On 12 March this year, the Under-Secretary said:
Our policy is to encourage the use of automated credit transfer".—[Official Report, 12 March 1993; Vol. 220, c. 751.]
In other words, the Government are not neutral or even-handed; they are peddling a particular option for their own self-interested reasons.
That fact is borne out by a trial of three new forms being sent to 24,000 people who are due to receive their pensions for the first time. The forms are designed to tell the pensioners what pension they are entitled to and how they may collect it. I have obtained copies of the forms, and each one of the three types is being sent out to a sample of 8,000 new pensioners. The first form is the most even-handed, because there is a section, part 9, headed:
How you want to be paid—you can choose".
That is fair enough. The form lists two options, the first of which is:
Straight into a bank account or building society account".
Then various details are given about that option.
The second option is described as:
By order book—at a post office".
Slightly fewer details are then given about that option. Later in the form, there are two sections for pensioners to


fill in, one of which will provide for payment of the pension straight into a bank or building society account, and the other of which will provide payment by order book at a post office. The pensioner can choose simply by filling in the form and sending it off.
That form provides the pensioner with a clear choice, although there could be objections about the way in which the two choices are described, because the first choice—payment straight into a bank or building society account—is accompanied by a list of its advantages, such as the fact that interest can be gathered on the money paid into such accounts. We might think that it was a bit disingenuous of the Government not to mention that they will be gathering interest from the money that they pay out, not weekly, but monthly in arrears. But we can leave that point to one side.
We might also complain that the option of the order book is described, but does not have any corresponding list of advantages appended. Nevertheless, there is enough information there for the pensioner to make a fairly clear, well-informed choice between the two options.
The second form, however, falls well short of offering the pensioner a clear choice between the two options that are available. In the equivalent part 9 of that form it says again,
How do you want to be paid? You can choose.
However, it does not give two options. It starts by listing
Straight into a bank account or a building society account.
Then it gives the same list of advantages and procedures.
At the bottom of the form it says simply:
If you want any more information, get in touch with your Social Security office.
There is no mention whatsoever of the post office option.
Also at the bottom of the form there is provision for a form to be filled in by the pensioner in order to get the pension paid straight into a bank or building society account. It then, finally, mentions payment by order book at a post office and asks the question:
Do you want to be paid by order book at a post office?
It does not mention any advantages or give any details. There are simply two boxes, one to be ticked for "no" and one to be ticked for "yes", and it says:
We will write to you about this.
So hardly any information is made available to the pensioner. The pensioner has to tick a box and send the form off, and the DSS will send the pensioner further information about the post office option.
That form is bad enough, but the third form that is being tested with 8,000 pensioners is even worse. It is similar to the other forms. It has a section headed:
How you want to be paid",
and, as in the second form, the option of having the pension paid straight into a bank or building society account is described in great detail. All the supposed advantages are listed, but again there is no mention of the post office option. It simply says at the bottom of the form that if the pensioner wants any more information he or she should get in touch with the social security office.
At the bottom of the coupon that has to be filled in by the pensioner in order to take advantage of the option of having the pension paid straight into a bank or building society account there are the words:
Do you want to be paid by other means?

It does not say whether those other means are through the post office or any other way. There are again two boxes, one to be ticked for "no" and the other for "yes", followed by the words:
We will write to you about this.
So the first of these forms points out the advantages of using automated transfer and describes to some extent the option of using a post office. The second form gives information only about banks and building societies; it mentions post offices, but gives no information whatsoever about that option. The third form does not even mention the fact that there is a post office option; it simply says that there are other options available.
The Parliamentary Under-Secretary of State, Lord Henley, made what I regard as a pretty astounding and breathtaking statement about these forms in the other place. He said:
The simple aim behind what we are doing is to test the effect of each of those forms."—[Official Report, House of Lords, 17 March 1993; Vol. 543, c. 1544.]
It would not take an Einstein to figure out the effect of these forms. Obviously, the more automated transfer is talked of, and the less the post office is mentioned, the more the pensioners will opt for the former. That will clearly be the effect of these three forms.
This is really a dodgy way to go about informing pensioners of their rights and options in receiving their pensions. Surely the Government should be trying to make their forms for pensioners more, rather than less, helpful.
I expect that the Minister is a fervent exponent of the citizens charter, and I ask him how it is consistent with that charter deliberately to withhold information from pensioners, DSS customers, as the last two forms do. I believe that the Government have no right to be steering and manipulating pensioners in this way. They should be offering genuine choice to pensioners, not a fake version of it.
I am looking for two things from the Minister, on behalf of the Government, when he replies. The first is a retraction of the Government's statement that it is their intention to encourage pensioners to use automated transfer. I want the Minister to be able to say on behalf of the Government that pensioners will be given genuine freedom of choice in this matter, without constraint or manipulation of any kind. The second is to ask his colleagues in the DSS to give a commitment that these trial forms will be shredded and thrown away, and new ones produced—forms that will provide proper comprehensive, unbiased information for pensioners.
The 20,000 post offices and sub-post offices of Britain are not just local centres of community life; they are also, I believe, a manifestation and a symbol in each town and village of Britain, whether in the Western Isles or Tunbridge Wells, of the wider national community, the country to which we all belong. A genuinely Conservative Government would have as one of its foremost priorities the preservation and enhancement of these symbols, these centres, of our national life.
But this Administration is not, of course, Conservative in that traditional and worthy sense. This is an Administration of libertarian dogmatists and cheeseparing accountants, who know the price of everything and the value of nothing. I fear that rural post offices are intended to be the latest in the long roll call of their victims.

Madam Deputy Speaker (Dame Janet Fookes): Before we continue, I remind hon. Members that an Adjournment


debate normally lasts only half an hour. It is understood that only the hon. Member raising the subject and the Minister may speak unless both grant their permission to other hon. Members. I know that the hon. Member for Western Isles (Mr. Macdonald) has allowed one hon. Member to come into the debate. I am sure that neither he nor the Minister will mind if others come in. Nevertheless, I believe that we should maintain the tradition.

Mr. Bill Olner: I thank and congratulate my hon. Friend the Member for Western Isles (Mr. Macdonald) on choosing this subject for the Adjournment debate. Before the general election, there was much talk about a double whammy. I do not know whether the wording of the advertisement was correct, or whether it had the intended impact. It certainly created a great deal of confusion. On this issue, there is a genuine double threat which pensioners have rightly picked up. I have had more letters in my postbag this past fortnight about the threat to post offices than I have had during the whole of the Maastricht debate, which trundled on here for a considerable time. This is a tremendously important issue. I am a little dismayed by the fact that the Government must have realised the fear that was felt by pensioners about the threat to their post offices and the threat to their ability to draw at post offices the benefits to which they were entitled.
My hon. Friend the Member for Western Isles mentioned post offices in rural areas. My constituency has a fairly extensive rural area and the post offices there are as my hon. Friend describes. In the urban areas, sub-post offices are also canters of the communities in which they are located. I am sure that many hon. Members have gone past post offices on pension day. One certainly knows which day is pension day when one passes a sub-post office. The pensioners have a ritual of queueing there fairly early. I do not know whether it is because they think that the Government will cause a run on the pound. Sub-post offices are an important and integral part of most communities, whether urban or rural.
It is not only pensioners who go to sub-post offices. If sub-post offices are forced to close because of a lack of business in terms of benefits being paid out, there is no other place within the immediate area where people can get television licence stamps, television licences or saving stamps, and there is no other place where they can pay their water rates or their council tax bills. The sub-post office outlet is an important part of our communities.
Most of the pensioners to whom I have spoken and most of the letters that I have received from pensioners say that they do not want pensions to be paid into banks or into building societies by automated credit transfer—ACT. They want to retain the right to go to the post offices to draw their pensions, or, if they cannot draw their pensions themselves, to he able to have their families or nominated people to draw the pensions there for them.
The majority of pensioners do not have bank accounts or building society accounts, but that is not the only point. As a result of the banks' meanness in many respects, the fear has crept in that once pensioners are trapped into having their pensions paid into those establishments, they will start charging pensioners for the transactions into and out of the accounts. If money is paid into the account, it

must come out of the account at some time. I understand that banks are looking closely at their charges to customers.
There is the twin fear about the monthly payment, which has been much mooted as a replacement for the weekly payment. Monthly payments are wrong in two respects. First, they will be paid in arrears. Pensioners already struggle in many respects. How on earth can they be expected to live for three weeks without a pension? It may be nice for people on large salaries to receive payments in arrears, but it is not good for people on low incomes, such as pensioners. Secondly, monthly payments will accelerate the closure of sub-post offices. Instead of a sub-post office doing four transactions a month, it will do only one. The position of sub-post offices is based on their throughput. If the throughput is on a monthly basis, it will obviously be very much reduced.
Sub-post offices are in communities, they serve communities and they are very much at the heart of communities. It would be a terrible loss to communities if they were closed. I should like the Minister to remove some of the fear that pensioners genuinely feel: that they are being thrust into the option of having their pensions paid by direct payment or paid monthly. That fear is being transmitted to pensioners who fear that their sub-post offices will be lost. I should like the Minister to give an assurance that no Government action will bring that about.

Dr. Michael Clark: Like the hon. Member for Nuneaton (Mr. Olner), I congratulate the hon. Member for Western Isles (Mr. Macdonald) on succeeding in having this Adjournment debate tonight, which is important and most timely. I thank him not only for allowing me to take part in the debate, but for inviting me to take part in it. In his letter of invitation, he said that there was a significant point that we should all make and that it was important that it had cross-party support. I am delighted that he has been so generous and I thank him very much.
Although it may be true that technically I was the first to raise the matter in the House when I raised it last Thursday at Prime Minister's Question Time, I readily concede that the hon. Member for Western Isles must have applied for the debate before I put my question. Technically, I was the first, but I concede that he was the first in mental attitude, and I gladly make that point.
The hon. Member for Western Isles spent some time going through the forms which many of us have. I am glad that he did so, because there is little doubt that the forms are an attempt to encourage pensioners and others on benefits to use banks and building societies rather than the post offices. I have no wish to stop anyone using a bank or a building society if that is what they wish to do. I am sure that the hon. Members for Western Isles and for Nuneaton agree with that. That is all right if it is people's free choice and if they are not being led by the nose in another direction. One can imagine that for people who are a long way from a post office and for people who pay most of their bills by cheque, it might be an advantage for the pension to be paid into a bank and to be used to settle their bills by cheque. It could be a positive advantage for people


who are housebound. But to lead the beneficiaries of payment to believe that there is only one major choice, a bank or a building society, is quite wrong.
I will not repeat what the hon. Member for Western Isles said about the forms—he went through them comprehensively. I just add one point. On the third form, the post office is not mentioned. At the bottom it says "By other means". At the top of the form, and on the other forms, when they want the pensioner or the person collecting benefit to use a bank or building society, the bank or building society comes first in the hope that the pensioner will tick that first. On the third form there are two blocks. One is
How often do you want your Retirement Pension paid? Every four weeks? Every 13 weeks?
We know that most people want it every four weeks, so that comes first and every 13 weeks comes second, because it is the option that is less likely to be used. But when it comes to the bottom, if one can find the post office on the second form that the hon. Member for Western Isles referred to, what is the first question?
Do you want to be paid by order book at a post office? No, Yes.
It is not very often in English that we suggest the answer in this form. It is usually "Yes or No". It is the same on the third form:
Do you want to be paid by other means? No, Yes.
It is a rather strange use of English and it is attempting to lead in a certain direction.
If people want the money paid into the bank, there is little doubt that sooner or later they finish up with bank charges. Even if a charge is not made for collecting benefit, we all become overdrawn from time to time. Once that happens, the charges escalate out of all proportion. It will happen to people who are least able to pay bank charges.
The idea that people should be paid benefits three weeks in arrears is no inducement to having benefits paid into a bank or building society. Perhaps somewhere on the form it should say,
If you do choose a bank or building society, you understand, do you not, that for the first month you will receive nothing at all? Now, do you want it paid into a bank or building society or would you like it paid by other means?
But I do not see that anywhere on the form, which is less than completely honest and open.
There is another consideration. If anyone should choose payment into a bank or building society, it is possible that the account will be a joint one. Money will then be paid into an account over which the beneficiary does not have total control. This is particularly significant when it comes to child benefit. The whole philosophy behind child benefit as promulgated by the Department of Social Security is that it should be targeted on the mothers. In many cases it goes straight into the mother's purse and into the housekeeping for looking after children without the father having anything to do with it. That is essential in some instances, for reasons that we all know about, but if this benefit were paid into a joint bank account mothers would lose control of money that is meant to help them look after their children.
There have been several references to the fact that the forms seem designed to lead people to choose banks or building societies. That is the whole presumption. But it is not a true choice. The choice is there if one looks very hard for it. It is there in the first form; it is there, if one looks

hard for it, in the second form; but in the third form one could be excused for thinking that there is no choice at all and, even if there is one, it is extremely well hidden. The Conservative party prides itself on offering choice, but in this regard we are not following the philosophy and manifesto of our own party.
We have heard that the post office network has 20,000 branches, but how many people realise that there are more post office branches than there are branches of the four major banks and the six major building societies combined? It is a marvellous network and an asset to the whole country, whether we live in the Western Isles, John o'Groats or Land's End. In those post offices, 40 per cent. of the business comes from the benefits and 50 per cent. of customers are there to collect the pensions or benefits. There is little doubt that if those receiving pensions and benefits are forced to have them paid into banks and building societies, the post offices will lose 40 per cent. of their business and 50 per cent. of their customers. That will undoubtedly lead to the closure of some post offices. I can see no alternative.
I do not suggest to the Minister that he removes the possibility of people having their benefit paid into a bank or building society—far from it, because I believe in choice —but the choice should be free and open, not guided.
A very strong campaign is going on at present and most hon. Members will have seen the leaflet put out by the National Federation of Sub-Postmasters. The campaign is slightly exaggerated, but I do not criticise it for that because any campaign worth its salt will be slightly exaggerated. One exaggerates to make a point and sometimes campaigns that are too modest fail to make their point at all.
I do not complain about the slight exaggeration, but I am concerned that, as a result of the campaign, many elderly, infirm and sick people are now worried sick that, in future, they will be unable to collect their pension in the normal way. The sooner we squash that anxiety and a categorical statement is issued from the Government to say that choice will remain, the sooner we can put at ease the anxieties and fears of many of our senior citizens in constituencies up and down and east and west of the country.
To deny choice will remove business from post offices and that will result in closures. Closures would, in due course, eliminate any choice for those who are in most need of it.

Mr. Paul Tyler: Hon. Members are extremely grateful to the hon. Member for Western Isles (Mr. Macdonald) not only for choosing to debate this issue on such a timely occasion, but for his foresight in doing so on an evening when we have the time to do it justice. I am also grateful to him for allowing me to intervene briefly in the debate. I hope not to cover those matters which have already been mentioned.
I agree with the argument advanced by the hon. Member for Rochford (Dr. Clark), but I take issue with him on one small factual point, because this is not a problem that has just been mentioned in the House in the past few days. My hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) and I were in the House some months ago before Christmas at 5.30 in the morning


to discuss it. You, too, were present, Madam Deputy Speaker, and you were, as always, wide awake while some of us were feeling rather sleepy.
My hon. Friend and I had looked forward in that debate because my hon. Friend had already received some answers from the Department that suggested that the Government were to pursue precisely the experiment that is now before us. We have now learnt the lesson to look at such proposals with a jaundiced eye. My hon. Friend the Member for Gordon (Mr. Bruce) also raised this subject with the Prime Minister this afternoon.
We all agree that this is a matter of all-party concern. I am also pleased, as I am sure you are, Madam Deputy Speaker, that at least one Member representing the south-west is here to ensure that the concern felt in the Western Isles is reflected from the other end of the country. This matter concerns all of us who represent rural constituencies.
The concern that has already been made clear by other hon. Members is that, if discrimination and pressure are to be exerted, this proposal is a step in the wrong direction. If we are to have positive discrimination, it should be towards the essential, public social service that is provided by the sub-post office network.
The difference in attitude between the service that pensioners and other beneficiaries receive from sub-post offices and that which they could expect to receive from a bank or building society was revealed by the experience of one of my constituents. She had an occupational pension and, for reasons best known to her former employer, it was decided that it should be paid by ACT into a. bank account. My constituent opened an account specifically for that purpose. Because she could not always get to the bank because of the distance involved and ill health, she made arrangements for someone to go there and cash a cheque on a weekly basis on her behalf.
My constituent found, however, that because the calculations were based on the 52 weeks of the year, the amount from the pension was never exactly the same to the nearest penny each week. That meant that when one cheque was presented for cashing and the sum was paid, she was 1p overdrawn. She then discovered that she was subject to bank charges. It is that difference in attitude between the traditional support and services that the sub-post office network has given and that offered by the only alternative, the banks and building societies, which is causing us so much concern.
Some 10 per cent. of sub-post offices have disappeared from the network in the past decade, and the proposal that the Department is apparently pursuing would turn that trickle into a veritable stream.
Hon. Members have said that about 40 per cent. of sub-post office turnover is for benefits of various sorts. In some parts of the country, notably rural areas with high levels of unemployment and perhaps above average numbers of retired people, it reaches 55 or even 60 per cent. of turnover. So the discrimination against rural areas, which can least afford the change, will be that much stronger.
In conjunction with the National Federation of Sub-Postmasters, my Liberal Democrat colleagues in the south-west and I have undertaken a number of surveys of the impact of the changes on the sub-post office network. It is clear from our work that upwards of 50 per cent. of village sub-post offices—we recognise that the same

situation may not apply in the suburbs or more central areas—would be at risk if the proposals became so persuasive that large numbers of people switched to ACT.
In those circumstances, the domino effect to which hon. Members have referred would become dramatic. There would, first, be the removal of a slice of benefits. That would be followed by the sub-post office being reduced to community hours, because the number of units would not justify the full number of hours. That would make it less convenient for people in the local community. Finally, because the sub-postmaster or sub-postmistress found that it was not viable, not commercial, not worth the effort and perhaps not worth training or keeping staff for that purpose, the post office would go.
Of those in that category in Cornwall, 45 per cent. have the only village store alongside, in the same building and as part of the same business. So the removal of post office business puts at risk the only general store in the village. I can speak only from experience in the south-west, but in those circumstances, almost invariably the store will go, not only because of the reduction in turnover as the result of the removal of post office business itself but because if people are not drawing their cash over the counter at one side of the building they will not be spending it on the other side. So the store goes.
In Cornwall in those circumstances, the nearest general store will be, on average, two miles away. The people of whom we are speaking tonight, bearing in mind the limited access to public transort these days, and with only limited access to private transport, will be badly cut off. I recently received a letter from a gentleman who was being persuaded to switch his Government occupational pension to a bank account. He explained that to get to his nearest bank would mean a £15 return taxi fare, which would remove a fair slice from any money that he received. The average distance in Cornwall from some villages to the nearest bank branch is more than 10 miles.
I hope that we shall hear from the Minister tonight not just that the Department will take seriously the criticisms that hon. Members in all parts of the House have made, but that they are prepared to open a dialogue again wth the Post Office. In recent days, Bill Cockburn, the Post Office's chief executive, has drawn attention to the fact that about 5,000 rural post offices are at stake as a result of the proposals and that many thousands of people would be affected by their closure. He said:
If such a thing were to happen, the entire network of post offices would be on the line".
He put forward a practical, sensible, up-to-date and modern suggestion. He said that the Post Office should work with the Department to develop a high-tech solution in the form of plastic cards which would, he claimed, enable customers to have their payments swiftly dealt with without difficulty through terminals in sub-post offices and with electronic links to the Department. He pointed out:
A third of the PO's income is generated by DSS payments at 20,000 outlets.
I do not intend to repeat points that have already been made, but for the benefit of all concerned—sub-postmasters and sub-postmistresses, pensioners and all those who live in remote areas or in any village that could be affected—we need a clear statement. I hope that the Minister's reply will offer opportunities for dialogue with the management of the Post Office and reassurance for all those who would be affected by a switch to ACT.
I hope, too, that the statement will show clearly that the Department and the Government recognise the value of a national network of post office outlets. As the hon. Member for Rochford said, it is unique to this country and is widely appreciated. If the Minister and the Department are able to do that, I am sure that it will be welcomed in all parts of the House. This, I hope, is the last that we shall hear of this preposterous proposition.

Mr. Nigel Evans (Ribble Valey): I, too, am grateful to the hon. Member for Western Isles (Mr. Macdonald) for initiating this Adjournment debate. As the hon. Member for North Cornwall (Mr. Tyler) said, we have heard the voice of the north and the south. The Ordnance Survey map shows that the Ribble valley is in the centre of the United Kingdom, so we are covering almost every part of the country in the debate.
My constituency is extremely rural and contains many rural post offices. In some villages, the post office is the only shop. It would be absolutely insane of me to say that post offices should be allowed to survive on their own. Some of them would be unable to do so. Nevertheless, we have to wake up to the reality that many of our rural post offices were under attack well before the introduction of automated credit transfers.
The opening hours of some village post offices in my constituency have been greatly reduced over the years. The hours have been so contracted in one rural post office that one wonders whether it is worth its remaining open. In another village, the post office operates from a pub. It is in Pendleton. The pub is the "Swan with Two Necks". Customers have to go to the pub for their postal requirements. That is an imaginative compromise.
We may have to look at innovative ideas so that new life may be breathed into our post offices to ensure that they survive. Some people may prefer ACT instead of having to go to the post office every few weeks. Given the choice, many pensioners may start to drift away from the post office. We must take a realistic look, therefore, at how we are to breathe new life into rural post offices and village stores. Some post offices sell other goods. The turnover of some of them is low and the profits marginal. They work right on the edge between profitability and loss.
Stamps can now be bought in virtually any shop. That was not the case 15 or so years ago. Stamps could be obtained only from the post office and between certain hours, which was nonsense. Nobody would argue today that stamps ought to be sold only by post offices.
If we are to attempt to breathe new life into post offices, we ought to consider freeing up post offices so that they can become agencies for banks and building societies. In some small towns and villages, banks and building societies are closing. A building society branch has recently closed in one village in my constituency.
We should also look at beefing up the Giro bank so that those pensioners who decide that they wish to take their pensions via ACT can do so easily through post offices. The hon. Member for North Cornwall suggested that we should also consider the use of hi-tech in post offices so that they are able to retain their customers.
Fraud related to pensions and social security payments is running at £100 million a year, and the current

administration costs amount to £400 million, so it is clear that something must be done. At the same time, I support the general thrust of the idea that pensioners must be given a choice. Those who want to have their pensions paid by the traditional method are entitled to that facility. However, fresh and lively ideas must be considered so that post offices in outlying regions may be given a new lease of life well into the next century.

Mr. Elliot Morley: I, too, congratulate my hon. Friend on bringing this matter before the House. Many hon. Members, from all parties and from many parts of the country, have been given an opportunity to express their concern—concern which has been expressed also in the very many letters that hon. Members, including myself, have received. The constituency that I represent includes urban and rural areas. Of course, this debate is about the rural aspect of the problem, and because its communities are scattered the Western Isles area is very vulnerable. But even in urban areas, many small and distinct communities, such as Riddings in the borough of Scunthorpe, are very concerned about the future of their post offices.
If we encourage measures as a result of which people do not have a clear choice, many post offices will no longer be viable. Indeed, many rural offices are under considerable threat already. I recently had an opportunity to discuss with the Minister the closure of the sorting offices in the villages of Messingham, Winterton and Burton upon Stather, which very nearly lost their postal delivery staff as well. Fortunately, we managed to have that facility saved. There is no doubt that privatisation in particular has introduced a new element of ruthlessness into the Post Office. If the viability of sub-post offices is in question, they will undoubtedly fail to survive.
The Minister is not responsible for the Department of Social Security or its policies, but he is responsible for the future of sub-post offices. Many of those who run these offices are small business people. The offices are privately run on a franchise basis, and the businesses are liable to be wiped out. It is ironic that a party which claims to be for small businesses is putting the knife into many people who already face very great difficulty. When one talks to small business people, one discovers that they no longer believe that the Government are for them.
Many villages—even larger ones like Messingham—have had the experience of their one and only bank closing down and departing due to lack of viability. When the nearest bank is several miles away, it is not sensible to suggest that it would be convenient for people to have benefits paid into bank accounts. Post offices provide other very important services to many people, particularly the elderly. For example, a constituent of mine who is blind relies on people in her sub-post office to help her to fill in forms. No doubt many banks would be willing to provide such a service, but in terms of community care and support there is a distinct difference between a bank and a sub-post office. There is also the social dimension. Many people meet weekly at the post office and, as has been said, they tend to buy goods and services. That is very important for the viability of these establishments. All those are under threat. I hope that the points about monthly payments will be noted. Many pensioners on limited incomes would find


it difficult to budget with monthly payments and should have the choice of weekly payments. That provision should be protected.
Bank charges have been mentioned. It is inevitable that the major banks will impose charges on personal accounts. There has been talk of that for some time. We have heard about the dreadful charges made to people who slip into overdraft, including excessive charges for the letters telling them that they are overdrawn.
People should have a choice as to how they are paid and whether payment is made monthly or weekly. The forms should not be bullying; they should not suggest to people who are not used to filling in forms, and who find them intimidating, that they will not have a choice.
Above all, we want to hear from the Minister that he will defend our system of sub-post offices. Without doubt, the proposed change would rip the heart out of many communities because it would remove an essential facility which provides community support and is convenient for many people, particularly in isolated rural areas. The change would also undermine the position of many families who have put much investment into their sub-post office businesses and who have given enormous support and commitment to the people whom they know and serve well. Consideration must be given to those people, and choice on the method of payment must be protected.

Mr. Eric Clarke: I want to add my weight to what has been said. I too congratulate my hon. Friend the Member for Western Isles (Mr. Macdonald) on achieving the debate. I represent an area in the southern part of Scotland. My constituency of Midlothian is made up of small towns, villages and hamlets. It borders the southern uplands of Scotland, with the Moorfoot hills on one side and the Pentlands on the other.
I do not want to repeat other speeches, but I support most of what has been said. I am worried about the lack of mobility of the people we are talking about. We have already heard that there are no bus services in some rural areas. The geographical spread of post offices is ideal. If we wanted to start from scratch to provide a post office system, we would probably place them where they are. Banks and building societies are inclined to cluster around one another. In a small town, they are all in the same street, next door to one another. That provides a choice for those who are mobile, but there are no banks in many hamlets and villages. That must be taken into account when the Minister revises Government policy, which I hope he will do.
I do business with banks in Scotland, and they are no worse than other banks. Sometimes they ask for a minimum of, say, £50 to be kept in an account to keep it in credit. Some pensioners could not afford to leave £50 in a bank account. With our salaries, we may not be concerned about other aspects concerning cheques, but when people have small, fixed incomes, every pound and every penny count.
Opening times are also important. Post offices are open longer and have more convenient opening times than some banks. That is another aspect that must be taken into cognisance when we are talking about this problem.
I shall end with this plea, because I do not want to repeat what has been said—although I endorse everything that has been said. I want to add my weight to the debate,

because the problem is not peculiar to rural areas. Obviously, the constituency of my hon. Friend the Member for Western Isles could not be more rural. Some of the sub-post offices are in small towns. I was approached by a sub-postmaster in Dalkeith, which is a small town, who is worried that his income will drop and he will have to close. Will we see huge queues in the few sub-post offices that will be left? When payments are made, people form huge queues. If those payments are spread out, it is done in an amicable way.
I hope that the Minister will take on board what has been said. We sincerely mean what we say—it is not a matter of scoring points. We are not here to be clever, and we are not in a position to score political or any other points. We are making a plea on behalf of the people who need our help. I am sure that we all care for the people in our communities who need help.

Mr. Bill Etherington: I should like to pay my respects on the death of Robert Adley. As a railway enthusiast all my life, I regarded him as a doyen of the railway world. As well as the loss to his family and the House, he will be a great loss to the railway industry at a time when people with his knowledge have never been more needed.
I do not want to repeat what has been said by other hon. Members. When Baroness Thatcher was Prime Minister, I remember her saying that there was no such thing as community. I am pleased that the hon. Members for Rochford (Dr. Clark) and for Ribble Valley (Mr. Evans) have shown that she was wrong in this, as she was in so many other things. I hope that this debate will be a precursor to debates that will save post offices. Much has been said about the deprivation of pensioners and so on, but the real issue is the loss of sub-post offices in rural areas. That is the most important aspect of the matter.
Perhaps I have been fortunate in my life, in that I have lived in many areas where there were post offices. I have lived in rural, semi-rural and extremely rural districts—I have seen it all. I have always been struck by the fact that, the more rural an area, the more important the sub-post office. I must declare a slight interest because, in my younger days, I had aspirations to own and run a sub-post office. It seemed to be an admirable way to serve society. Although I imagine that it would not be profitable, it would be a worthwhile life.
Although my constituency is mainly urban, some sections are semi-rural. The loss of post offices in my constituency would diminish the quality of life for the people who live there. The village where I live, which is not in my constituency, is a good example of the problem. If there were no post office in my village, people would need to take a bus ride costing £1·07 each way into Durham city to get to a post office—the bus service runs hourly. I am talking not simply about pensioners but about disabled people, unemployed people—there are many of them in my part of the world—and young mothers with children, who greatly appreciate and rely entirely on the post office for many things.
The hon. Member for Ribble Valley referred to post offices in business. Post offices often provide services that are only marginally profitable. Such services would not be acceptable as a business in their own right. A post office in


my village sells wool—it is the only place that does—and provides a clothes cleaning service. Those are valuable services.
There is nothing new about the threat to close sub-post offices. To my knowledge, the same threat has been made for the past five or six years. There were rumours that sub-post offices would be drastically cut because of the expenditure involved but they were retracted. However, they continue to come back in different guises. I am sure that Conservative Members represent more rural communities than Labour Members. We represent many towns and cities.
The Post Office has operated a wonderful service for more than 100 years, and it is now more vital than ever for old people to have a post office service close at hand. In years ahead, a larger percentage of the population will be old; moreover, they will be living even longer. Some people do not live within 10 miles of a bank—not just those living in the back of beyond; bank branches are now closing at a fair rate of knots, as are some building society offices.
My hon. Friend the Member for Jarrow (Mr. Dixon) represents a constituency adjoining mine. Although, as a Whip, he cannot speak in the debate, in many ways he could make a better speech than any of us, given that his constituency contains remote villages without good bus services. It is vital for all hon. Members affected by the proposals to listen to what their constituents have to say, and to impress their views on the Government.
I am always very wary of the "balance the books" mentality. It is all very well to say that excessive expenditure is at the root of a problem, and that specific action can be taken to solve it; it is all a bit like the oxo game—having dealt with one square, we find that there are eight more, each of which affects the one adjoining it.
The Government may hope to obtain short-term relief in the form of savings on the cost of benefits, but the long-term deprivation and the social costs involved could far outweigh any savings. Not many hon. Members are present tonight, but I hope that those who are present will try to persuade their colleagues of the importance of retaining what is perhaps the most important service enjoyed by villages, semi-rural areas and, often, urban areas.

Mr. John Spellar: I thank my hon. Friend the Member for Western Isles (Mr. Macdonald) for introducing the debate, and for allowing others to speak.
Pensioners currently feel that they are under siege. They face a rise in fuel bills as result of the application of VAT and its extension to standing charges; the pressure on council finances poses a threat to their concessionary fares; crime is escalating in their neighbourhoods, and they feel that they are prisoners in their own homes. Now, on top of all that, their local post offices are threatened. They are being pressurised to leave a system that they have known for many years, and to pay money into their bank accounts. Of course that should be an option, but it should not be pressed to the extent that it has been, to the detriment of many post offices.
Hon. Members on both sides of the House have cited many reasons to oppose the Government's plans, but there are others. It has been pointed out that bank branches are

far less accessible than local post offices; that trend is increasing as the main banks close many of their outlying branches in a process that they describe as rationalisation. "Closure" would be a better description. Many pensioners will find it even more difficult to reach their branches if their concessionary bus passes are taken away.
The weight of correspondence received by hon. Members illustrates the difference between the relationship of banks with their customers and that of post offices with theirs. Does anyone seriously imagine that the banks could have mounted the campaign mounted by sub-postmasters in defence of their system? Pensioners clearly appreciate that—if, that is, they have an account at all. Yesterday, a parliamentary written answer revealed that 30 per cent. of those in receipt of benefit have no bank account. Indeed, I doubt whether many banks would be keen on such accounts: they seem to be putting great pressure on small account holders, and—as has been said—imposing charges.
We know the worry caused to pensioners by official letters from bank managers. There have been some tragic cases of suicide.
Pensions will be paid either four or 13 weeks in arrears. The pensioners and many others on benefit in my constituency are having trouble living from week to week and from day to day. If they have to budget one month at a time, some will be able to do so, but for a considerable number that will be a major burden and pressure.
For all those reasons, I hope that the Minister will admit that the Government have been found out and will give in on the forms with good grace. I hope that they will scrap the experiment and tonight give a message of good news to pensioners and their friends, the postmasters.

Mr. Jimmy Boyce: Like other speakers, I want to thank my hon. Friend the Member for Western Isles (Mr. Macdonald) for tonight's debate, and all hon. Members who have spoken in it. It has been a constructive debate; I think that the House performs at its best when we listen to other speakers. I am as guilty as anyone of baying and braying across the Chamber, but it has been extremely edifying to sit quietly and listen to other hon. Members make their speeches.
The debate is not about right and left, but about right and wrong. The proposals are out of order and wrong. They benefit nobody except the Exchequer. Therefore, the Government's proper role of looking after people—certainly as they become older—is being denied.
I do not know who first raised the matter in the House. Before last Thursday, I received letters from pensioners in my constituency. Some of them expressed anger, some frustration and others total disbelief at the proposal. I wrote back to them saying that I would support their campaign to keep open the sub-post offices where they collected their pensions. My letter was fairly standard because one cannot say much more than that one will or will not support the campaign.
Last Thursday, the hon. Member for Rochford (Dr. Clark) asked the Prime Minister a question:
Is my right hon. Friend receiving letters, as I am, from pensioners and others receiving benefit who are concerned in case that benefit should be paid exclusively into banks and building societies? Will he confirm that benefit will continue to be available from post offices and sub-post offices, thus giving the customers a choice in line with Conservative policy?


The Prime Minister replied:
This is a matter on which concern is raised from time to time. We have made no proposals to make those changes. If we had any firm proposals to make those changes, we would bring them before the House."—[Official Report 6 May 1993; Vol. 224, c. 283.]
I was immediately relieved and, by telephone, arranged for the standard letter to be altered, because letters were still arriving for me. I changed the standard letter to say that the Prime Minster had given an assurance that the House would debate the matter before the changes took place. As it is not a right and left issue, but a right and wrong issue, I believed that the House would not support the proposal. I am most grateful to the hon. Member for Rochford for obtaining that reply from the Prime Minister, with which I was delighted. I am now receiving "thank you" letters for removing some of the anger, frustration and disbelief that people felt.
More importantly, I believe that today the Prime Minister stood on its head his message of only seven days ago—I shall have to read the Official Report tomorrow to make sure of that. I am extremely worried that the changes are to take place and that people are being encouraged, by stealth or subterfuge, to follow such a course of action. As the hon. Member for Rochford said, the forms are designed in such a manner as to obtain a particular result: "Would you like to win a million pounds—yes or no?" Of course we know the answer. I can remember working in Blackpool as a photographer some years ago. The spiel we gave people was, "Would you like a set of three or the half dozen?" Much the same principle applies here.
I believe that the Prime Minister today overturned what he said last week. If he did, I will have to tell people that I am sorry about the first letter saying that we needed a campaign, and about the second, saying that the campaign was off; but here is a third letter, saying that the campaign is back on again. That is no way to run a country. If the Government have proposals, let them come clean and bring them before the House. If they do so, the proposal will be defeated by the integrity of hon. Members on both sides of the House.

Mr. Harry Barnes: Much of the case has been made already, so I shall be brief. We want the Minister to respond to the points that have been made so that we can intervene in his speech for clarification.
I was much taken by the speech of my hon. Friend the Member for Sunderland, North (Mr. Etherington). I know his constituency well; it contains Roker Park, the home of Sunderland football club. My father was born in the constituency, which contains a great many terraced houses and all sorts of different areas. My hon. Friend described the sub-post offices in those areas, some of which are urban, some semi-rural and some extremely rural.
My constituency, too, contains every category of area. To the north lie the outer suburbs of Sheffield—a highly urbanised place with good sub-post office provision. Then there are the semi-rural areas containing former colliery villages with adjoining fields and farms. All sorts of history and traditions are represented in my constituency.
The very rural parts are in west Derbyshire and the Derbyshire dales, where people have been devastated by

some of the changes of recent years—changes which have led to a lack of community transport and many of the other problems that hon. Members have mentioned today.
My constituency contains a wide variety of political strongholds. It is divided into solid Labour areas and solid Conservative areas. On this issue I have received representations from both, particularly from the rural areas which should be natural Conservative strongholds. The Government should respond to the feelings of people in these areas.
Sub-postmasters are often important figures in local government, serving on parish and district councils. Amazingly enough, because sub-post offices have become communal centres on which people depend, these sub-postmasters can get elected either as independents or even as representatives of parties which would not do well in normal circumstances in a particular area.
We should bear that sort of loyalty and community feeling in mind, because it shows that there is something about sub-post offices of such importance that it needs to be preserved. Therefore, we want neither measures that would ruin sub-post offices nor the privatisation which might follow.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton): The hon. Member for Rotherham (Mr. Boyce) referred to the number of letters that he has recently received on this subject. We have all received similar postbags. I sometimes ruefully reflect that if it were not for the scaremongering campaigns that occur at various times during the year and that generate large amounts of post, the position of the Post Office might be rather less viable than it is. Members of Parliament perform a valuable function in helping to support the Post Office network.
I am happy to join with hon. Members in congratulating the hon. Member for Western Isles (Mr. Macdonald) on drawing his place in the ballot and choosing this subject for debate. As has been said, he has been fortunate, and we have been fortunate in having an unusually extended debate on the Adjournment. As I was in charge of earlier business—the debate on the Reinsurance (Acts of Terrorism) Bill—I could have filibustered myself by keeping the debate on that Bill going so as to close off the Adjournment debate. I would not have wished to do that because this is an important matter for all our constituents, and it is right that we should debate it.
The hon. Member has stolen a march on his own Front Bench and anticipated the debate that will be held next Wednesday. We are just a warm-up act, and the star turns will have their opportunity next week. Let us compare the quality of the two debates. As the hon. Member for Sunderland, North (Mr. Etherington) said, the debate has been conducted in an unusual spirit for the House of cool, calm reflection without all the heat of the party battle. I venture to think that our debate will be rather more good tempered and good humoured, and perhaps will generate more light than heat, than that which will be held next Wednesday.
I am grateful for the opportunity to place on record the Government's views on this important matter. I share opinions on it with hon. Members who have spoken from both sides of the House. As an individual Member of


Parliament, and as a member of the Government, I am particularly well aware of the great value placed on the local post office in smaller rural communities. I have some 35 post offices within my constituency, which has some substantial rural areas. I know the high regard in which they are held by everybody, from pensioners to young mothers, and by all the other groups mentioned by hon. Members.
I doff my cap in the direction of the hon. Member for North Cornwall (Mr. Tyler) and admit that my parents-in-law live in a small rural village in the depths of Cornwall, perhaps even more remote than the villages in his constituency because they live on the Lizard peninsula. I can also tell him that they are Liberal voters, but I have never held that against them, and even on that account I would not wish to close their local post office.
We all understand that the local post office is not just somewhere to buy stamps or collect pensions. As many hon. Members have said, it is often the focal point of the community. I hardly ever use a bank because I regularly cash cheques here in the post office of the House of Commons, which is open at much more user-friendly hours than any bank. Nobody can doubt our commitment, both collectively as a Government and individually as Members of Parliament, to this important national institution.
The Government's commitment to a nation-wide network of post offices is unequivocal. Hon. Members have asked me to place on record a commitment that we will maintain a viable national network of post offices. I am happy to do that. In so doing, I am not saying anything that the House will not have heard before. We wrote that commitment into our manifesto. None of the other parties did so. That is not to impute that they are not as committed to that aim as we are, but we thought it was useful and valuable to make that commitment during the election campaign. When my right hon. Friend the President of the Board of Trade announced the review of the future structure and organisation of the Post Office last July, he made it clear that that commitment was not negotiable, and I have great pleasure in repeating it this evening.
I should like to explode two myths about the Post Office which often surface to call that commitment into question. The first myth is that the Post Office is in steep and inexorable decline, and the second is that the Government are gradually destroying the viability of post offices by reducing the amount of business that is put their way. I am glad to be able to tell the House that there is no truth in either of those tales. The Post Office is one of a rare breed: it is a popular and relatively successful nationalised industry. Whether it could be even more successful in the private sector is another issue which I may touch on later in the debate.
As Government, we aim to open up new opportunities for the Post Office in order to support the viability of an institution to which we are all committed. The Royal Mail is flourishing today as never before, and is widely recognised as one of the best postal services in the world. Over the past decade, Post Office Counters Ltd. has been consistently profitable, with a growing turnover and rising


standards of customer services. Rumours of its demise are greatly exaggerated and do not accord with the historical trend.
How have the misunderstandings that have been alluded to in the debate come about? As with other economic developments, we always hear about the bad news, but rarely about the steady improvements and the winning of new business. As so often with the media, bad news is good news and good news is no news. We hear not about steady improvements but about closures and other deteriorations. I do not know why that happens, but there have been a number of reflections on the subject recently as a result of some remarks by Martyn Lewis.
There has been a steady improvement in the Post Office, and new business has been won. The effect of the automated credit transfer system, which gave rise to the debate, is a case in point. There was a time when the only way in which to collect a state pension or other state benefit was over the post office counter. Then, in 1982, we introduced the option of having pensions or child benefits paid directly into personal bank or building society accounts. Nearly half of new pensioners now choose that option, but when it was first introduced it was widely feared that it heralded the beginning of the end for the Post Office. That fear was widely expressed in the House at the time. My hon. Friend the Member for Rochford (Dr. Clark)—or was it my hon. Friend the Member for Ribble Valley (Mr. Evans)?—mentioned the diversification of post office services into other shops in the rural community. That development too gave rise to the claim that it heralded the end of the Post Office.
In fact, by a combination of options that have been introduced over the years, we have improved the delivery of services to the consumer. That may not necessarily involve the use of the post office or the sub-post office, but the consequence has not been the disappearance of post offices, especially rural sub-post offices, as an important part of local communities. In spite of the gradually increasing proportion of business going to banks and building societies, the total volume of DSS business, and hence of Government business in total, transacted through post offices has increased. The share of the pie may be smaller, but as the pie itself is bigger, the Post Office has not lost out.
The hon. Member for Western Isles mentioned the citizens charter in his opening speech. In the citizens charter we made it clear that we would extend the range of choice open to recipients of other benefits by giving them the option of having their benefits paid into bank or building society accounts. Last November the Secretary of State for Social Security announced that he would encourage more people to use that method of payment, which is cheaper to administer than post office order books, and also more secure.
It is true that there is a cost attached to different methods of payment, and in so far as we use less efficient or more costly systems of payment, the sums expended on those are not available to be spent in many other socially useful ways. Although I am saying this in a neutral way, we ought to consider as a background to this debate what the costs are.
The total cost to the DSS of paying child benefit by post office order book is currently nearly twice as high as the cost of paying it through ACT. With pensions, it is about 10 times as high. If the Post Office payment system were to be automated, the difference in cost would be considerably


smaller. The point was made in the course of the debate, I think by the hon. Member for North Cornwall, that Mr. Cockburn's recent remarks about improvements in service delivery through post offices could reduce costs without reducing the degree of usage of the post office. I happily tell him this evening that we are—

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Question again proposed, That this House do now adjourn.—[Mr. Arbuthnot.]

Mr. Hamilton: I happily tell the hon. Gentleman that of course we will consider that, and any other proposal which has the effect of improving the service delivery to consumers and making it more efficient, because those efficiency savings can be passed on to the community in a variety of other valuable ways. It cannot be right for us to close our eyes to these opportunities, because it is opportunities that we are talking about.
I fully understand the nature of the fears that have been expressed in this debate, and I want to deal with them this evening.

Mr. Macdonald: The Minister took up the reference to the citizens charter. Does he accept that, as a matter of principle, full information about the choices available to pensioners should be given to them; that, as a matter of principle, it should be as easy for them to choose one option as to choose any other? There should be a level playing field available to pensioners when these options are presented to them.

Mr. Hamilton: As the hon. Gentleman knows, the forms to which he referred in some detail in the course of his speech are part of a trial which the Department of Social Security has been engaged in in an attempt to test the popularity of the different methods of payment. I have heard the criticisms that he and other hon. Members have made, and the Secretary of State for Social Security will, of course, in evaluating the response to the different forms which have been issued, bear all those criticisms in mind.
It is not for me, as a Department of Trade and Industry Minister, to second-guess what my right hon. Friend in the DSS will say in due course, because the evaluation exercise has not yet been completed. But the fears that have been expressed by hon. Members this evening will, of course, form the backdrop to the evaluation, along with all the other responses that are received.

Mr. Olner: A few moments ago the Minister used the word "encourage". I get the impression that the Secretary of State for Social Security is doing more than encourage people with market testing and making people choose between one form of payment and another. People throughout the country can see that they are being coerced, not encouraged, to have their benefits paid through ACT or on a monthly basis. It is time that the Government came clean about this. This is why the pensioners are fearful of what is going on.

Mr. Hamilton: I cannot say any more than I have said already. I can only repeat that this is a trial. Each form has been issued to about 8,000 people, I believe. When the responses have been evaluated, the Department will be able to see the popularity of each option. Of course, if there is a design flaw in the forms and that view is accepted by the Department, that will form the backdrop to the decision. I am not in a position this evening to agree with

hon. Members who have expressed their fears on this subject in the House and elsewhere, but I can say that their criticisms have been heard.

Dr. Michael Clark: It gives me no pleasure to disagree with my hon. Friend, but I shall do so for a second. My hon. Friend said that the forms were designed to test the popularity of different methods of payment of benefits and of pensions. I take issue with him on that. The forms are not designed to test the popularity of different methods of payment. If they were, we should have the level playing field that the hon. Member for Western Isles (Mr. Macdonald) mentioned. The forms are designed to discover how effectively the wool can be pulled over the eyes of those who receive pensions and benefits. They have nothing to do with the popularity of the form of payment.

Mr. Hamilton: My hon. Friend and the hon. Member for Western Isles have explained the nature of the three forms, each of which I have here this evening. Their comments have been heard. I have made my own comments and I have explained the reason for the issuing of the forms. I have also explained that, when the results are complete, the Department of Social Security will take a view on the basis of everything that has been said as part of the whole debate on the matter.

Mr. David Harris: I apologise for not having been here for most of the debate; I had another engagement. I entirely agree with the two points just made. No one in the House believes more fervently in freedom of choice than my hon. Friend the Minister. However, to test what people want, they must be told that they can continue to receive their benefits through post offices. I suspect that in many cases there are advantages for them in doing so, certainly in a remote rural constituency such as mine. Surely, if there is to be proper market testing, we must tell people that it is not a question of their having to be paid through the banks and building societies, but that there is also the option of their continuing to be paid through sub-post offices, especially village sub-post offices. That is the only fair way to test this.

Mr. Hamilton: I do not accept that the third form mentioned, which seems to have generated the most controversy, precludes the use of post offices from the delivery of the service. However, I shall draw my hon. Friend's words to the attention of my mother-in-law, who is one of his constituents. Whether the consequence will be that she votes for him at the next election, I cannot say.

Mr. Tyler: The Minister said just now that he could not second-guess the views of his colleagues in the Department of Social Security and we understand that. I wonder whether he will be quite so specific on the next point. A week ago, the Prime Minister appeared to say unequivocally that the Government were not committed to pressurising people towards the ACT method with which we are all concerned this evening. However, this afternoon, in answer to my hon. Friend the Member for Gordon (Mr. Bruce), he appeared to be ambivalent; he appeared to equivocate. The Minister mentioned the political allegiance of his mother-in-law. For her benefit, for my benefit and for the benefit of the House, will the Minister tell us whether the Prime Minister was correct last week or whether he was correct this afternoon? I do not


expect him to answer on behalf of the Department of Social Security, but I am sure that he has been fully briefed this evening on the views of No. 10.

Mr. Hamilton: Beauty, like ambivalence, is in the eye of the beholder. All I can say is that the Government are perfectly consistent at all times. I do not have here the words that my right hon. Friend the Prime Minister uttered in the House this afternoon. I heard them at the time, but I admit that I cannot now remember exactly what he said. All I can say is that, whatever words were used in the House this afternoon, the commitment is exactly the same as that given last week.
I was making a point about the effects of ACT on the Post Office system and on its connection with the diversification of Post Office services. As with all other businesses, some lines of work will increase while others decline. New opportunities are opening for the Post Office which should bolster its position. One promising prospect, for example, could be the retailing of the national lottery. We do not yet know whether the Post Office will win a contract to sell lottery tickets, but we have extended its statutory powers so that it will be able to bid for the contract. Who knows how much business that could generate if the Post Office were successful? It could be an important element in the underpinning of the Post Office network throughout the country. Of course, I am not the Secretary of State for National Heritage. If only I were Prime Minister, it would be much more convenient, and I could answer all the points made in the debate. Perhaps I will be, one day.

Mr. Boyce: The way the hon. Member is carrying on, upsetting most of his Back Bench colleagues, it is hardly likely. I want to take up the point about post offices selling lottery tickets. That is a good proposal, but if the Government have taken away people's rights to draw their pensions at the post office, the purpose of this debate is defeated. The debate is about pensioners drawing pensions from post offices. Any additional business for post offices is a good thing, but the debate is not about that.

Mr. Hamilton: The hon. Gentleman poses a hypothesis. It is not Government policy to remove the right of pensioners to receive their pensions from the post office. As was said by the hon. Member for North Cornwall, the Prime Minister said last week that our policy was to encourage people to receive benefits through their accounts, while maintaining a viable network of post office outlets. So the two are not necessarily inconsistent. As was written in our manifesto, we are absolutely committed to the maintenance of a viable network of post offices throughout the country.
To return to the forms which have been sent out, I am well aware of the concern that has been expressed about the recent trial. It has been noticed in ministerial postbags as well. But I want to stress that the trial is only a trial and is merely to test the impact of different methods of presentation. I have heard the criticisms that my hon. Friends and others have made this evening, but the Department of Social Security is looking at ways of encouraging the take-up of automated credit transfer on a voluntary basis.

Mr. Peter Luff: rose—

Mr. Hamilton: I would like to continue, if I may, because, as a result of willingly taking interventions, I am falling behind with my speech and I shall be unable to answer, even in three quarters of an hour, all the points made in the debate, which I am anxious to do.
Redesign of some of the forms is one of the ways being considered. None of the forms is intended to deprive benefit recipients of the option of being paid through the post office. I understand that all three forms indicated that a choice of payent methods was available, but I have heard the criticisms made by my hon. Friends, in particular, about the clarity of the way in which a particular choice was put before people. I can assure my hon. Friends that those points will be read with great care by my right hon. Friend the Secretary of State for Social Security in the morning.
The hon. Member for Western Isles asked me for two commitments. He asked if the Government would retract their policy to encourage pensioners to use ACT. I am afraid that I cannot give him the commitment that he sought. We have been encouraging the take-up of ACT for 10 years and we shall continue to do so. I have explained the cost background and the benefits that will flow from making the system more efficient.
The hon. Member also asked me if the test trial forms would be shredded and new ones produced with "comprehensive and unbiased" information. The management of the trial is a matter for my right hon. Friend the Secretary of State, but I repeat the point that I have just made. It is no more than a test, and my right hon. Friend needs to assess the results before he can decide how to redesign the forms. No doubt he will take account of that point before making any decision in that respect.
Although we have a viable system of post offices around the country, particularly in rural areas, I realise that this particular claim may sound rather hollow to those living in areas which have lost their local post offices in recent years. Although that is sad, it is not something that is a feature of the 1990s or of Conservative Governments. In the past five years, the number of post offices has fallen by 1,151, but under the Labour Government a similar fall—of 1,190 —occurred between 1974 and 1979. The figures are almost identical. Between 1965 and 1970, 541 post offices were closed.
The trend of post office closure has gone on for some time and at the end of each year there are usually a smaller number of post offices than there were at the beginning of it. If that trend continued, however, one would cease to have a viable national network. Many of the arguments that have been put forward today with such vigour and eloquence could equally have been made at any time in the past 30 years, given the steady decline in the number of post offices.
A large networked organisation such as Post Office Counters Ltd. is generally successful, but some individual post offices are struggling. Demographic changes and changes in shopping patterns mean that in certain areas the viability of post offices grows weaker. Rural offices, in particular, are vulnerable to those changes as traditional village life changes and declines. I deplore that because I live in a small village and I particularly value its community life.

Mr. Harris: Surely we should be looking at new ways in which to attract extra business to post offices. My hon. Friend has already mentioned, quite properly, the


possibility of their selling lottery tickets, but we should ease the restrictions and inhibitions on post offices so that they can do other business. Another feature of rural areas —it is certainly true of mine, as it no doubt is of my hon. Friend's constituency—is that the sub-branches of the banks are closing down. Why not lift the inhibitions from sub-post offices so that they can do a deal with the banks to act as their agents? That would encourage the viability of those post offices. We must not be defeatist about village post offices.

Mr. Hamilton: I entirely agree with my hon. Friend, and that is the value of the Post Office review, which is under way at the moment. That review has led to exactly the same type of scaremongering as that which has given rise to the campaign mentioned in the debate. Because the Government do not want to set parameters on the general review of opportunities open to the Post Office, we could be asked to rule out various options. Eventually, we would end up with a real dog's breakfast.
As in so many areas, nationalisation has imposed restrictions on the development of an important industry. If those restrictions were removed, it could offer new life to a great national institution. The post office review will certainly consider all the options, such as those suggested by my hon. Friend the Member for St. Ives (Mr. Harris). I hope that that review will breathe new life into the post office system.
The Post Office is very keen to be released from the bonds and shackles of state control. Consequently, it would be wrong if we dismissed any options. I regret, therefore, the timidity of those who have poured scorn on the Post Office review and have caused many people to worry unduly about its outcome.

Mr. Brian Wilson: Will the hon. Gentleman give way?

Mr. Hamilton: I am reluctant to do so because the hon. Gentleman was not here for much of the debate and I want to respond to those hon. Members who have been present throughout.
It is always regrettable when a local post office has to close, but I am pleased to say that for an increasing number of smaller offices salvation has been found in the introduction of community post offices.
Offices are open on a part-time basis, according to the level of business transacted. The Post Office introduced that programme in 1988 and it has proved successful in keeping a local service going which might otherwise have been withdrawn following the retirement of the existing sub-postmaster or sub-postmistress. That is a current problem. There are many instances where a sub-postmaster retires and the post office cannot find a replacement. Indeed, it is a serious problem in some rural areas.
I do not know if it is a problem in the Western Isles, where there are 85 post offices. As the hon. Member for that constituency said eloquently in his speech, the local post office is the most widespread meeting point and community institution in that scattered area. Finding a successor to the postmaster or postmistress is a serious problem in some parts of the country.
Hon. Members are familiar with some of the more colourful examples of community offices mentioned in recent debates about the rural network. They illustrate the benefits of flexibility and the opportunity to develop that

has arisen in recent years. Community post offices have opened in pubs, churches, even garden sheds and front rooms. That trend would not have been thinkable prior to the developments of recent years.
I agree with the hon. Member for Nuneaton (Mr. Olner) that if it were Government policy to close rural sub-post offices it would be a foolish policy. That is not our policy. Curiously enough, there has been much community of interest and agreement in the debate, and it has in many ways been similar to the previous debate in which I starred—[Interruption.] I was searching for the right word, which sometimes eludes me.
There is a commitment to achievement of the same objective. The means by which we would get there may be different, but our objective is the same. We have affirmed our commitment to the nationwide network of post offices, including the rural network.
The fact that Government business transacted through post offices has not decreased but increased in each of the last few years is a demonstrable illustration of the Government's commitment to the policy that we declared in our manifesto. The Post Office is making strenuous efforts, in particular in co-operation with the Rural Development Commission, to keep small rural post offices open, particularly in areas where changing shopping patterns have been threatening their viability.
As I come to the question of the Post Office review, I pay tribute to my hon. Friend the Member for Ribble Valley, who dealt with the matter in the context of his extremely scattered constituency, which I know well as I spent some time there in a by-election not long ago—[Interruption.] In the general election I was otherwise engaged in my own constituency. The hon. Member for Jarrow (Mr. Dixon), with his usual percipience, spotted why my hon. Friend the Member for Ribble Valley lost the by-election but won the general election.
I appreciate that his constituency is scattered and that the importance of the local post office in Ribble Valley is not to be understated. The Post Office review gives great opportunity, as my hon. Friend recognised, for scattered rural areas of that kind. I cannot tonight state when our decisions will be made public because no decisions have yet been made, but my hon. Friend can rest assured that when we have something to say on the matter it will be announced to the House. In the meantime, I assure everybody that the review is being undertaken with no preconceptions as to its outcome and that we are looking at both public and private sector options.
It has been said tonight that the privatisation of the Post Office might lead to large numbers of post office closures. The hon. Member for Derbyshire, North-East (Mr. Barnes) said that. Although no decisions have been made—so speculation about the effect of privatisation would be idle—I believe that the impact of greater flexibility to which loosening the bonds of state control has given rise in other formerly nationalised industries would be to the benefit of the Post Office and would underpin the network to which we are all committed.
That is why I regret the confusion that has been created in recent times over the impact of ACT and the possible impact of privatisation. Those two issues ought to be considered separately, because our policy of encouraging ACT on a voluntary basis has been in place for some time—for 10 years or so—and we have yet to decide whether to privatise part or all of the Post Office. Whatever the outcome of the review, our commitment to a nationwide


network of post offices will not be compromised. There are ways to protect the network, whether it be in the public or the private sector, and also whatever services the Post Office provides.
I remind hon. Members, as did the hon. Member for Glanford and Scunthorpe (Mr. Morley) in his speech, that 19,000 of the 20,000 post offices are already in the private sector, because all sub-post offices are run by individual entrepreneurs. They contract for their services with the Post Office, but the premises and the business itself are firmly in the private sector. That has been a great strength of the system.
The Post Office's programme of converting Crown offices to agency status has been successful in improving efficiency, with Post Office services having been transferred to the private sector. There is no inconsistency at all between the private sector option and the provision of services that hitherto were the responsibility of a nationalised institution. What matters is the Government's commitment to those services being available on a widespread and viable basis throughout the country. I am happy yet again to reaffirm that commitment.

Mr. Morley: There is still a great risk in privatising the core of a service such as the Post Office, which is in part publicly controlled but which, of course, has a private interest element—the contracting out of sub-post offices. I draw the Minister's attention to the privatisation of the electricity boards. Has he thought about the number of showrooms that have been closed as the electricity companies seek to maximise their revenue? We believe that, as well as having a duty to make a profit, the Post Office should provide a public service.

Mr. Hamilton: It is a little far-fetched to compare electricity showrooms with post offices. I do not therefore intend to respond to the hon. Gentleman's point, as only a couple of minutes are left to me.
We are considering in our review whether there are ways of organising all or part of Post Office business in such a way as to enable further gains to be made and the customer to have even better services while safeguarding our nationwide network commitment and our universal mail service obligation. My right hon. Friend the President of the Board of Trade has made it crystal clear—there was no ambivalence or ambiguity about it—that the two unbreakable commitments on the basis of which our Post Office review is predicated are, first, that a nationwide network of post offices and a universal postal delivery service at a uniform tariff will be preserved and, secondly, that our universal mail service obligation, whatever the outcome of the review, will be as it is now.
We are, however, seeking to improve efficiency in order to reduce costs. The consequence will be that money which is now wasted can be channelled into other more productive and socially useful services. That must be the objective and aim of us all in the debate. Nobody benefits from waste. We must seek to use scarce resources in ways that are most productive and that give the greatest satisfaction to consumers. That, of course, is the rationale for the existence of any business. We believe in striving constantly for improvements. If there is a way to improve the current arrangements, whether through privatisation or in any other way, we shall not shrink from making appropriate changes.
I hope that during this valuable and interesting debate I have been able to allay the fears of at least some hon. Members, though the experience of many years in politics inclines me to believe that such optimism is usually misplaced. I am grateful to the hon. Member for Western Isles and to all those who have participated in the debate for this opportunity to run over issues which are of such concern to our constituents. I look forward to seeing act 2 on Wednesday, when the ringmaster of the drama, as on this occasion, will be the hon. Member for Jarrow. On that—

The motion having been made at Ten o'clock and the debate having continued for half an hour, MADAM DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Ten o'clock.